Question 1: The financial statements of Zach Industries for the year ended December 31, 2012, follow. Zach Industries Balance Sheet December 31, 2012 Duncomber 31, 2012 Assets Cash Sales revenue $160,000 Marketable securities Less: Cost of goods sold 106,000 Accounts receivable $ 500 1,000 25,000 Grom profits $ 54,000 Less: Operating expenses Selling expense 5 16,000 General and administrative expenses Lease expense Depreciation expense Total operating expense $ 37,000 Operating profics $ 17,000 Less: Interest expense Net profits before taxes $ 10,900 Less: Taxes Net profits after taxes 4,360 S 6,540 Retained earnings 10,000 1,000 10,000 6,100 Inventories Total current assets Land Buildings and equipment Less: Accumulated depreciation Net fixed assets Total anets Liabilities and Stockholders' Equity Accounts payable Notes payable Total current liabilities Long-term debt Common stock 45,500 $72.000 $ 26,000 90,000 38,000 $ 78,000 $150,000 $ 22,000 47,000 $ 69,000 22,950 31,300 26.350 $150,000 Total liabilities and stockholders' equity Ratio Current ratio Industry average Actual 2011 Actual 2012 1.30 1.84 Quick natio 0.70 0.78 Inventory turnover 2.50 2.59 Average collection period" 37.5 days 36.5 days Debt ratio 65% 67% Times interest carned ratio 3.8 4.0 Grom profit margin 38% 40% Net profit margin 3.5% 3.6% Rerum on total assets 4.0% 4.0% -Return on common equity 9.5% 8.0% Market/book ratin 1.1 1.2 "The fum's 3,000 outstanding shares of common pck closed 2012 at a pe of $25 per share. and on a 365-day year and on and-of-year figures Use the preceding financial statements provide above complete the table (a). Assume the industry averages given in the table are applicable for both 2011 and 2012. Analyze Zach Industries' financial condition as it is related to (1) liquidity, (2) activity, (3) debt, (4) profitability, and (5) market. Summarize the company's overall financial condition. (Marks: 15)