Problem #3 The condensed balance sheet and income statement for Major Company are presented below. MAJOR COMPANY Balance Sheet At December 31, 2019 Cash $ 25,000 Notes receivable (due August 15, 2020) 41,000 Accounts receivable (net) 50,800 Merchandise inventory 74,200 Property, plant, and equipment (net) 310,000 Intangible assets 14,800 Total assets $ 515,800 Current liabilities $ 120,200 Bonds payable (12%) (long-term) 105,000 Common stock 60,000 Retained earnings 230,600 Total liabilities and equity $ 515,800 MAJOR COMPANY Income Statement For the Year ended December 31, 2019 Sales $ 884,000 Cost of goods sold 482,400 Gross profit $ 401,600 Operating expenses 180,600 Operating income $ 221,000 Interest expense 12,600 Income before income tax $ 208,400 Income tax expense 62,520 Net income $ 145,880 Required: Use the answer sheet provided in the answer packet. Be sure to show your work! 1) Compute the following ratios for Major Company. (Round your answer to 2 decimal places.) a) Acid test ratio (Industry average = 113.24:1) b) Current ratio (Industry average = 97.88:1) c) Debt-to-Equity ratio (Industry average = 80.34:1) d) Times Interest Earned ratio (Industry average = 19.49:1) e) Return on Shareholders Equity (Industry average = 61.01%) f) Profit margin on sales (Industry average = 14.82%) 2) Compare Majors ratios/returns to the fbvindustry. Is Majors ratio/return Favorable or Unfavorable compared to the industry? 3) What does each of these ratios compared to the industry mean for Major Company?