Please be detailed

2. Calculate days accounts receivable, inventory turnover, and days accounts payable for 2012 and 2013 and determine whether the use (source) of cash in working capital was a result of sales growth, credit policy, inventory policy, or trade credit policy. Did these turnover ratios improve or deteriorate? What was the resulting impact on cash flow? 3. Interpret the figures by evaluating the firms CFO and key financial ratios. 4. Identify potential problems that the firm faces.

TABLE 1 Balance Sheet and Income Statement Data for Chem-Co (Millions of Dollars) Balance Sheet Assets 2012 2013 Income Statement 2014 Cash and marketable securities Accounts receivable Merchandise inventory Prepaid expenses Gross fixed assets 120 40 80 4 $289 $30 102 65 $6Net sales 215 104 Cost of goods sold Gross margin Selling expenses General and administrative expenses Depreciation Operating profit Interest income Interest expense $861 680 181 64 60 26 31 6 Less accumulated depreciation Net fixed assets Intangible assets 149 57 92 Total assets $425 Liabilities and Net Worth $106 223 Profit before taxes Notes payable-bank Current maturities of long-term debt Accounts payable Accruals Federal income tax payable Long-term mortgage Long-term debt Income taxes 5 50 Net profit 2 4 16 43 $212 40 37 32 $344 40 Total liabilities Common stock Retained earnings Total net wortha 81 Total liabilities and equity $289 $425 aNet worth reconciliation Beginning net worth Net profit Dividends paid (cash) 10 Ending net worth Note: Inventory was $45 million in 2011 81 TABLE 1 Balance Sheet and Income Statement Data for Chem-Co (Millions of Dollars) Balance Sheet Assets 2012 2013 Income Statement 2014 Cash and marketable securities Accounts receivable Merchandise inventory Prepaid expenses Gross fixed assets 120 40 80 4 $289 $30 102 65 $6Net sales 215 104 Cost of goods sold Gross margin Selling expenses General and administrative expenses Depreciation Operating profit Interest income Interest expense $861 680 181 64 60 26 31 6 Less accumulated depreciation Net fixed assets Intangible assets 149 57 92 Total assets $425 Liabilities and Net Worth $106 223 Profit before taxes Notes payable-bank Current maturities of long-term debt Accounts payable Accruals Federal income tax payable Long-term mortgage Long-term debt Income taxes 5 50 Net profit 2 4 16 43 $212 40 37 32 $344 40 Total liabilities Common stock Retained earnings Total net wortha 81 Total liabilities and equity $289 $425 aNet worth reconciliation Beginning net worth Net profit Dividends paid (cash) 10 Ending net worth Note: Inventory was $45 million in 2011 81