Problem 2 (88 points) You have just been hired as a financial analyst for Moselle Company. Your boss has asked you to perform a comprehensive analysis of the company's financial statements, including comparing Moselle's performance to its major competitors. The company has provided the following data: Year 1 Balance Sheet December 31, Year 2 and Year 1 Assets Year 2 Current assets: Cash $ 252,000 Accounts receivable, net 255,000 Inventory 133.000 Prepaid expenses 18,000 Total current assets 658,000 Plant and equipment, net 681.000 Total assets $ 1,339,000 $ 200,000 260.000 120,000 20,000 600,000 730.000 $1,330,000 $ $ 177,000 25,000 39,000 241,000 200,000 441,000 190,000 30,000 40.000 280,000 200,000 460,000 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, $4 par value Additional paid-in capital Retained earnings Total stockholders' equity Total liabilities & stockholders' equity 240,000 80,000 578,000 898,000 $ 1,339,000 240,000 80,000 550,000 870,000 $1,330,000 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 1,400,000 900,000 500,000 436,462 63,538 14,000 49,538 17,338 32,200 Dividends on common stock during Year 2 totaled $4,200. The market price of common stock at the end of Year 2 was $9.72 per share. To begin your assignment, you gather the companies in Moselle Company's industry: ont, you gather the following financial data and ratios that are typical of 2.3 Current ratio Acid-test ratio Average collection period Average sale period Return on assets Debt-to-equity ratio Times interest earned ratio Price-earnings ratio 40 days 40 days 5.50% 0.55 4.2 20 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) www.euruni.edu e. The average sale period. (4 points) f. The operating cycle. (4 points) g. The total asset turnover. (4 points)