Problem #3 The condensed balance sheet and income statement for Major Company are presented below. MAJOR COMPANY Balance Sheet At December 31, 2019 Cash Notes receivable (due August 15, 2020) Accounts receivable (net) Merchandise inventory Property, plant, and equipment (net) Intangible assets Total assets Current liabilities Bonds payable (12%) (long-term) Common stock Retained earnings Total liabilities and equity $ 25,000 41,000 50.800 74,200 310,000 14,800 $ 515,800 $ 120,200 105,000 60,000 230,600 $ 515,800 MAJOR COMPANY Income Statement For the Year ended December 31, 2019 Sales Cost of goods sold Gross profit Operating expenses Operating income Interest expense Income before income tax Income tax expense Net income $884,000 482,400 $ 401,600 180,600 $ 221,000 12,600 $ 208,400 62,520 $ 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) et Return en Shareholders' Equity Industry average - 6101961 SKIP THIS ONE! f) Profit margin on sales (Industry average = 14.82%) 2) Compare Major's ratios/returns to the industry. Is Major's ratio/return favorable or Unfavorable compared to the industry? 3) What does each of these ratios compared to the industry mean for Major Company