Problem 2 (88 points) You have just been hired as a financial analyst for Tobia Company. Your boss has asked you to perform a comprehensive analysis of the company's financial statements, including comparing Tobia's performance to its major competitors. The company has provided the following financial data: Year 1 Balance Sheet December 31, Year 2 and Year 1 Assets Year 2 Current assets: Cash $ 201,000 Accounts receivable, net 236,000 Inventory 158,000 Prepaid expenses 96,000 Total current assets 691,000 Plant and equipment, net 842.000 Total assets $ 1.533,000 $ 110,000 200,000 190,000 90,000 590,000 920,000 $ 1,510,000 $ Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Bonds payable Total liabilities Stockholders' equity: Common stock, $3 par value Additional paid-in capital Retained earnings Total stockholders' equity Total liabilities & stockholders' equity 173.000 36,000 88.000 297,000 170,000 467,000 150,000 40,000 90.000 280,000 170,000 450,000 210,000 60,000 796.000 1,066,000 $ 1,533,000 210,000 60,000 790,000 1,060,000 $ 1,510,000 $ Income Statement For the Year Ended December 31, Year 2 Sales (all on account) Cost of goods sold Gross margin Operating expenses Net operating income Interest expense Net income before taxes Income taxes (35%) Net income 1,410,000 850,000 560,000 525,077 34,923 16,000 18,923 6,623 12,300 S ends on common stock during Year 2 totaled $6.300. The market price of common stock at the end of Year 2 was $1.78 per share. begin your assignment you gather the following financial data and ratios that are typical of companies in Tobia Company's industry: 2.3 1.2. Current ratio Acid-test ratio Average collection period Average sale period 30 days 60 days Return on assets 5.50% Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 0.65 4.2 10 LUITPallCJILIUM C. You decide, finally, to assess the company's liquidity and asset management. Compute the following for this year: a. Working capital. (4 points) b. The current ratio. (4 points) c. The acid-test ratio. (4 points) d. The average collection period. (4 points) e. The average sale period. (4 points) f. The operating cycle. (4 points) g. The total asset turnover. (4 points)