Rafael, your newly appointed boss, has tasked you with evaluating the following financial data for Western Gas & Electric Co. to determine how Western G&E's value has changed over the past year. The investment firm for which you work will make a positive (or "buy") recommendation to its investing clients if Western G&E's value has increased over the past year, a neutral (or "hold") recommendation if the value has remained constant, or a negative (or "sell") recommendation if the value has decreased. He has recommended that you use several metrics to ascertain how the firm's value has changed, and he has provided you with the following income statement and balance sheet. Western Gas & Electric Co. Income Statement January 1 - December 31, Year 2 Western Gas & Electric Co Balance Sheet December 31, Year 2 Year 1 $4,312,500 $3,750,000 3,075,000 675,000 Year 2 Year 2 $235,125 783,750 1,371,563 2,390,438 1,528,312 $3,918,750 Year 1 $213,750 712,500 1,246,875 2,173,12!5 1,389,375 $3,562,500 Sales Cash and cash equivalents Receivables Inventory Expenses1 3,450,000 862,500 150,938 711,562 EBITDA Depreciation and amortization expense Current assets EBIT Net fixed assets 543,750 93,750 450,000 180,000 $270,000 $162,000 $108,000 Total assets Liabilities and Equity: Accounts payable Interest expense 582,187 232,875 $349,312 EBT $587,813 382,078 822,938 1,792,829 754,359 2,547,188 274,312 1,097,250 1,371,562 $3,918,750 $534,375 Tax expense (40%) Net income Common dividends Addition to retained earnings 1Excludes depreciation and amortization Notes payable 748,125 1,629,844 685,781 2,315,625 249,375 997,500 1,246,875 $3,562,500 $209,587 $139,725 Total current liabilities Long-term debt Total liabilities Common stock ($1 par) Retained earnings Total equity Total debt and equity Shares outstanding Weighted average cost of capital 274,312 7.98% 249,375