Q No.1

The Balance Sheet and Income Statement Data for Galaxy Computer Co. is given below

BALANCE SHEET
Assets	2001	2000
Cash	7,282	9,000
Short term investment	0	48,600
Acc. Receivable	632,160	351,200
Inventories	1,287,360	715,200
Total current assets	1,926,802	1,124,000
Fixed Assets
Plant & Equipment	1,202,950	491,000
Less: Acc dep	263,160	146,200
	939,790	344,800
Total assets	2,866,592	1,468,800
Liabilities & Equities
Current liability
A/c Payable	524,160	145,600
Notes payable	720,000	200,000
Accruals	489,600	136,000
total Current liability	1,733,760	481,600
Long-term debt	1,000,000	323,432
Common Stock	460,000	460,000
Retained Earning	-327,168	203,768
	1,132,832	987,200
Total equities	2,866,592	1,468,800
Income Statement
Sales	5,834,400	3,432,000
Cost of Goods Sold	5,728,000	2,864,000
Other expense	680,000	340,000
dep	116,960	18,900
EBIT/ LOSS	-690,560	209,100
Interest expense	176,000	62,500
EBT/ LOSS	-866,560	146,600
tax	-346624	58640
net income/loss	-519,936	87,960

Required:

1. Compute at least two ratios in each area (numbered 1 to 6 below) for both years. (Note: Do not take average of two years to calculate any formula, work on individual year figure for all calculation. For example, do not take average inventory or average receivable) (3 Marks)

1. Liquidity
2. Profitability
3. Leverage
4. Efficiency ratio/Asset Activity
5. Coverage ratio
6. Market ratio

2. Based on your calculations in part a, interpret and give your comments about the companys liquidity, profitability, and solvency (2 Marks).