Problem 2: Complete the balance sheet and income statement, then answer questions 1-7 below. Balance Sheet: (Fill in the X) Assets Current Assets: --Cash 171000 --Accounts Receivable 698000 -- Inventory 897000 Total Current Assets X Total Fixed Assets 2482000 Total Assets X Liabilities and Owner's Equity Current Liabilities: --Accounts Payable --Notes Payable Total Current Liabilities 483000 565000 X 2000000 Long-term Liabilities Total Liabilities 1000000 Owner's Contribution Retained Earnings Total Owner's Equity Total Liabilities and Owner's Equity 521500 3285450 Income Statement Net Sales Cost of Goods Sold Gross Margin Operating Expenses Administrative Expenses Other Expenses Total Operating Expenses Net Operating Income Interest Expense Net Income Before Taxes Income Tax Net Income After Taxes 1202423 320646 80161 X 152400 42480 11 Calculated i n collant 1) Calculate and interpret the following ratios: a. Earnings on sales b. Return on sales c. Return on equity d. Return on assets e. Gross margin f. Net working capital g. Current h. Quick i. Debt-to-equity j. Solvency k. Debt-to-asset 1. Asset turnover m. Inventory turnover n. Days to sales in accounts receivable 2) How is the firm doing financially? What are some of the strengths and weaknesses associated with the firm? What could they do to better improve their financial situation? 3) What would happen to the financial situation of the firm given a 20% increase in inputs? What could you do to improve your financial situation? 4) Your accounts receivable increased by 20%, what is the impact on your business and how could you do to improve your financial situation? 5) Over the past 5 years your firm has had a ROE of: Year ROE MacBook Pro