Refer to exhibits 2.1 and 2.2 to use the data to evaluate current ratio, quick ratio, debt ratio, times interest earned, payables turnover, receivables turnover, inventory turnover, return on equity, return on sales, payables conversion period, receivables conversion period, inventory conversion period, and cash conversion cycle. Then comment on the financial strength or weakness of the corporation based on these ratios and cycles.

EXHIBIT 2.1 Rengas Company Income Statement (for the years ended December 31, 2012, and 2013) 2012 2013 Sales $125,000,000 $150,000,000 Less: Cost of goods sold 85,000,000 100,000,000 Gross profits 40,000,000 50,000,000 Less: Selling and administrative expense 15,000,000 20,000,000 Less: Depreciation expense 3,000,000 5,000,000 Operating profit 22,000,000 25,000,000 Less: Interest expense 4,000,000 4,000,000 Earnings before taxes 18,000,000 21,000,000 Less: Corporate taxes (at 35%) 6,300,000 7,350,000 Net income after taxes $11,700,000 $13,650,000 Dividends paid $ 6,000,000 $ 7,400,000EXHIBIT 2.2 Rengas Company and Plastic Manufacturing Industry Ratios Rengas Industry Current ratio 2.9 1.6 Quick ratio 3.3 0.9 Debt ratio 50.0% 50.0% Times interest earned 6.3 3.6 Receivables turnover 5.5 7.3 Average collection period days 66.0 49.3 Inventory turnover 6.7 7.1 Days in inventory 54.8 50.7 Return-on-equity 21.8% 10.9% Return-on-sales 9.0% 3.0% Source: RMA, Annual Statement Studies, Industry NAICS 326122, for companies with greater than $25 million in sales