QUESTION 2) (35 pts) Income statements for 2019 and 2020 of ABC Inc. are given below: a) Express the income statement information in common size percent for both 2019 and 2020. (20 pts) - Show calculations. Use two digits after the decimal point. If you do not show your calculations, you will not gain any point from this question. a) Assess whether this company's situation is favorable or unfavorable. (15 pts, min. 75 words) Sales Cost of goods sold (-) Gross profit Operating expenses (-) Operating profit Rent revenue Interest expense (-) Gain on sales of an old machine Net income 2020 2019 170,000 143,500 58,600 65,400 111,400 78,100 24,000 8,460 87,400 69,640 1,500 0 5,600 4,000 2,500 0 85,800 65,640 QUESTION 3) (35 pts) Year-end balance sheets for 2020 and 2019 of XYZ Inc. are given below: a) Compare the liquidity position of this company at the end of 2020 and 2019 by computing the current ratio and acid-test ratio. (20 pts) - Show calculations. Use two digits after the decimal point. If you do not show your calculations, you will not gain any point from this question. b) Comment on the ratio results you computed in (a). (15 pts, min. 75 words) Cash Trade receivables Inventory Property, Plant & Equipment Total assets 2020 2019 40,000 30,000 16,000 24,000 14,000 15,000 90.000 126.000 160,000 195,000 Accounts payable Salaries payable Long-term bank loan Common stock Retained earnings Total liabilities and equity 30,000 20,000 20,000 45,000 44,000 86,000 20,000 20,000 46,000 24,000 160,000 195,000