Question 2 1. Suppose that Spacex Company reported the following summary of financial statements for 2019-2020 and Industry ratio for 2020 as follows. A. Summary of income statement Items 2019 2020 Sales 645 685 Cost of goods sold 480 530 EBIT 135 125 Net income 82.0 75.30 B. Summary of balance sheet Items 2019 2020 Inventory 65 86 Total current asset 318 347 Total fixed assets 374 386 Current liabilities 165 189 Long-term liabilities 268 220.69 Total shareholders' equity 259 32331 C. 2020 Industry average ratios Ratios 2020 ratio Operating profit Margin 31% ROA 20% ROE 28% Current ratio 2.00 Debt to asset ratio 35.0% Total asset turnover ratio 1.79 times Inventory turnover ratio 13.1 times Required? A. Determine the ratios of the company comparable with the industry ratios listed in Table c above and interpret the results. Solution Ratio 2019 2020 Operating profit Margin (EBIT/Sales) ROA (Net income Total Assets) ROE (Net income Total Equity) Current ratio (Total Current Asset/Total current liability) Debt to asset ratio (total debt total Asset) Total asset turnover ratio (Sales/Total Assets) Inventory turnover ratio (Sales/Inventory) 3