Refer to the financial statements of Incom Corporation. All sales of the company were credit sales.

REQUIRED:

Using ratio analysis, review the financial condition of the company for the two years of 2017 and 2016 as follows:

1. Assess the liquidity (ability to pay current liabilities) of Incom by calculating two ratios that are measures of liquidity (exclude inventory and accounts receivable ratios see d below).
2. Assess the profitability of Incom by calculating two ratios that are measures of profitability.
3. Assess the solvency of Incom by calculating two ratios that are measures of solvency.

4. Assess the efficiency of Incoms inventory and accounts receivable by calculating two ratios (one for inventory and one for accounts receivable) that are measures of their efficiency.
5. Overall, what can you conclude about the performance of Incom over the two years of 2016 and 2017?

INCOM CORPORATION Comparative Balance Sheet December 31 2017 2016 2015 $ $ Assets Cash Prepaid Expenses Accounts receivable Inventory Long-term investment Property, plant and equipment (net) Total Assets 70,000 8,000 85,000 157,000 120,000 155,000 595,000 55,000 10,000 40,000 115,000 120,000 225,000 565,000 75,000 35,000 25,000 110,000 210,000 455,000 is $ $ $ $ 62,000 Liabilities and shareholders' equity Accounts payable Short-term notes payable Bonds payable Common shares (400,000 shares outstanding) Retained earnings Total liabilities and shareholders' equity 85,000 55,000 130,000 175,000 150,000 595,000 75,000 55,000 155,000 160,000 120,000 565,000 160,000 145,000 88,000 455,000 $ $