Prepare the following:

1. Statement of changes in financial position (funds flow statement) using the net working capital definition of funds for XYZ Company. Evaluate its financial condition (15 pts)
2. Compute the following ratios for 2018 and 2019: (a) debt/stockholders equity ratio; (b) return on total assets; (c) current ratio; (d)net profit margin, and (e) average collection period (use 365 days). Evaluate its financial condition. (15 pts)

The financial statements for XYZ Company for the years 2018 and 2019 are given below. 2019 $ XYZ Company Balance Sheet December 31, 2019 and 2018 2018 ASSETS Current Assets Cash $ 150 Accounts Receivable 300 Inventory 700 Total Current Assets $ 1,150 Fixed Assets Plant and equipment $ 700 Less: Accumulated depreciation (150) Net fixed assets $ 550 Long-term investments $ 400 Totals assets $ 2, 100 200 600 600 1,400 $ $ 900 (200) $ 700 $ 300 $ 2,400 $ 800 50 850 150 $ $ $ 800 600 1,400 2,400 $ $ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 400 Taxes payable 100 Total current liabilities $ 500 Bonds payable $ 500 Stockholders' equity Capital stock $ 700 Retained earnings 400 Total stockholders' equity $ 1,100 Total liabilities and stockholders' equity $ 2. 100 XYZ Company Income Statement For the Year Ended December 31, 2019 Sales $ Cost of goods sold Gross margin $ Operating expenses Selling expenses $ 100 Administrative expenses 150 Depreciation expense 50 Total expenses Net income $ 900 200 700 300 400 XYZ Company Statement of Retained Earnings For the Year Ended December 31, 2019 Retained earnings, Dec. 31, 2018 $ 400 Add: Net income 400 $ 800 Deduct: Dividends paid 200 Retained earnings, Dec. 31, 2019 $ 600