Refer to the sheet above.

1. At the end of 2017, Winter Stylist Corp is performing a ratio analysis. Using the table provided above tell us what the ratios are for:
   1. Gross Profit Margin (as a %)
   2. Current Ratio
   3. Days Inventory
   4. Average Collection Period
   5. Days purchasing outstanding
   6. Leverage ratio
   7. Debtto-equity ratio
   8. Asset Turnover
   9. Cash Conversion Cycle
   10. Interest coverage ratio

2. For the next set of questions, we will review the ratios from Winter Stylist Corporation in the year 2016.

Gross profit margin Ratio = 36.21%

Current ratio = 3.44

Days Inventory = 110.46

Average collection period = 40.56

Days purchases outstanding = 35.17

Leverage ratio = 2.54

Debt to Equity = 1.55

Asset turnover = 1.25

Cash conversion cycle = 115.85

Interest coverage ratio = 9.12

Between 2016 and 2017, in which year did Winter Stylist Corporation have:

1. Best gross profit margin
2. Lowest days inventory
3. Highest leverage
4. Most advantageous cash conversion cycle
5. Highest accounts receivable turnover
6. Most liquidity

3. Which actions would help the organization owners to reduce leverage:

• Raise additional equity capital
• Owner A sells all shares to Owner B
• Sell PP&E at book value and use cash to pay off creditors
• Pay off long-term debt
• Increase net profits (including retained earnings)
• Use short-term debt to pay off long-term loans

WINTER STYLIST CORPORATION Balance Sheet As of December 31, 2016 Current Assets: Cash Accounts receivable Inventories Prepaid expenses Total Current Assets $ $ $ 110,000 140,000 310,000 25,000 585,000 Current Liabilities: Accounts Payable Salaries and wages payable Current portion of bank loan Deferred revenue Total Current Liabilities $ $ $ $ S 90,000 20,000 45,000 15,000 170,000 $ Non-Current Assets: Furniture and fixtures Buildings and property (Accumulated Depreciation) Total Non-Current Assets Non-Current Liabilities: Bank Loan Total Non-Current Liabilities $ 300,000 $ 300,000 $ 120,000 $ 450,000 $ (154.000) $ 416,000 Owners' Equity: Contributed Capital Retained earnings Total Equity $ 250,000 $ 281,000 S 531,000 Total Assets $ 1,001,000 Total Liabilities and Owners' Equity $ 1,001,000 WINTER STYLIST CORPORATION Balance Sheet As of December 31, 2017 WINTER STYLIST CORPORATION Income Statement For the year ending December 31, 2017 Current Assets: Cash Accounts receivable Inventories Prepaid expenses Total Current Assets $ $ $ $ $ 143,000 178,000 358,000 33,000 712.000 Current Liabilities: Accounts Payable Salaries and wages payable Current portion of bank loan Deferred revenue Total Current Liabilities $ 196,000 $ 30,000 $ 45,000 $ 18,000 $ 289,000 Total Revenue $ 1.602.000 Cost of Goods Sold $ 985,000 Gross Profit S 617,000 Salaries and wages $ 199.000 Marketing expenses $ 46,000 Selling, General, and Administrative $ 98,000 Insurance expense $ 48,000 Depreciation expense $ 44,000 Operating Profit S 182,000 Interest expense $ 30,000 Taxes $ 33.000 Net Income S 119.000 Non-Current Assets: Furniture and fixtures Buildings and property (Accumulated Depreciation) Total Non-Current Assets Non-Current Liabilities: Bank Loan Total Non-Current Liabilities $ 255,000 $ 255,000 150.000 $ 540,000 $ (198,000) S 492,000 Owners' Equity: Contributed Capital Retained earnings Total Equity $ 260,000 $ 400,000 $ 660,000 Total Assets $ 1,204,000 Total Liabilities and Owners' Equity $ 1,204,000