Part B Your second challenge is to advise Kaj on what has been happening to Scandi from a financial leverage, profitability, and efficiency perspective.

C. Creditors, as well as management, are also concerned about the ability of the venture to meet its debt obligations as they come due, the proportion of current liabilities to total debt, the availability of assets to meet debt obligations in the event of financial distress, and the relative size of equity investments to debt levels. Calculate average ratios in each of these areas for the 20172018 and 20182019 periods. Interpret your results and explain what has happened to Scandi.

D. Of importance to Kaj and the venture investors is the efficiency of the operations of the venture. Several profit mar-gin ratios relating to the income statement are available to help analyze Scandis performance. Calculate average profit margin ratios for 20172018 and 20182019 and describe what is happening to the profitability of Scandi Home Furnishings.

E. Kaj and the venture investors are also interested in how efficiently Scandi is able to convert its equity investment, as well as the ventures total assets, into sales. Calculate several ratios that combine data from the income statements and balance sheets and compare what has happened between the 20172018 and 20182019 periods.

F. An ROA model consisting of the product of two ratios provides an overview of a ventures efficiency and profitability at the same time. An ROE model consists of the product of three ratios and simultaneously shows an overview of a ventures efficiency, profitability, and leverage performance. Calculate ROA and ROE models for the 20172018 and 20182019 periods. Provide an interpretation of your findings.

SCANDI HOME FURNISHINGS, INC. *350,000 shares of common stock were issued to Kaj Rasmussen and the venture investors when Scandi Home Furnishings was incorporated in mid-2016