Question One: Abdulaziz, an experienced budget analyst at Al itgan Manufacturing Company, has been charged with assessing the firm's financial performance during 2019 and its financial position at year-end 2019. To complete this assignment, he gathered the firm's 2019 financial statements, which follow. In addition, Abdulaziz obtained the firm's ratio values for 2017 and 2018, along with the 2019 industry average ratios (also applicable to 2017 and 2018). These are presented in the table (1) Table (1) Martin Manufacturing Company Industry average Ratio Historical ratios 2019 Actual 2017 Actual 2018 Actual 2019 Current ratio 1.7 1.8 1.5 1.0 0.9 1.2 5.2 5.0 10.2 Quick ratio Inventory turnover (times) Average collection period Total asset turnover (times) 50 days 55 days 46 days 1.5 1.5 2.0 Debt ratio 45.8% 54.3% 24.5% Times interest earned ratio 2.2 1.9 2.5 27.5% 28.096 26.096 1.196 1.0% 1.296 1.7% Gross profit margin Net profit margin Return on total assets (ROA) Return on common equity (ROE) Price/earings (P/E) ratio Market/book (M/B) ratio 1.5% 2.4% 3.196 3.3% 3.2% 33.5 38.7 43.4 1.0 1.1 1.2. Table (2) Al Itgan Income statement Alltgan Manufacturing Company Income Statement for the Year Ended December 31, 2019 Sales revenue Less: Cost of goods sold Gross profits $5,075,000 3,704,000 $1,371,000 $650,000 416,000 152,000 1,218,000 S 153,000 Less: Operating expenses Selling expense General and administrative expenses Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate -40%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders 93,000 $ 60,000 24,000 S 36,000 3,000 $ 33,000 Earnings per share (EPS) $0.33 Table (3) Al Itgan Balance Sheet Al Itgan Manufacturing Company Balance Sheet December 31 Assets 2019 2018 Current assets Cash Accounts receivable Inventories Total current assets Gross fixed assets (at cost) Less: Accumulated depreciation Net fixed assets Total assets S 25,000 S 24,100 805,556 763,900 700,625 763,445 $1,531,181 $1,551,445 $2,093,819 $1,691,707 500,000 348,000 $1,593,819 $1,343,707 $3,125,000 $2,895,152 Liabilities and Stockholders' Equity Current liabilities Accounts payable S230,000 $ 400,500 Notes payable 311,000 370,000 Accruals 75,000 100,902 Total current liabilities S 616,000 $ 871,402 Long-term debt $1,165,250 $ 700,000 Total liabilities $1,781,250 $1,571,402 Stockholders' equity Preferred stock (2,500 shares, Si.20 dividend) $ 50,000 S 50,000 Common stock (100,000 shares at S4 por! 400,000 400,000 Paid-in capital in excess of par value 593,750 593,750 Retained earnings 300,000 280,000 Total stockholders' equity $1,343.750 $1,323,750 Total liabilities and stockholders' equity- $3,125,000 $2,895,152 The firm's 100,000 outstanding shares of common stock closed 2019 at a price of $11.38 per share. Required a. Calculate the firm's 2019 financial ratios, and then fill in the preceding table. (table 1) b. Analyze the firm's current financial position from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm's liquidity, activity, debt, profitability, and market. C. Summarize the firm's overall financial position on the basis of your findings in part b
