Solo Inc. is a publicly listed furniture company. The company is well known for manufacturing furniture for major hospitals and organizations in the United States and Europe. The company has experienced significant growth in recent years due to the increased demand for its quality products. Although the company is very profitable and is determined to maintain its profitability trend, its strategic focus in the last three years has been to manage its liquidity. The company has consulted you to analyze its financial data to determine if it is managing its liquidity effectively.

Additional Information Provided:

The following additional information has been provided:

$2020$ selected account balances

Selected Financial Data $-2020$

Current Assets

$ $750,000\mathrm{.}00$

December $31$

Current Liabilities

$ $350,000\mathrm{.}00$

December $31$

Accounts Receivable

$ $151,000\mathrm{.}00$

December $31$

Inventory

$ $196,000\mathrm{.}00$

December $31$

Total Assets

$ $253,000\mathrm{.}00$

December $31$

Total Income

$ $550,000\mathrm{.}00$

December $31$

Total Expenses

$ $615,000\mathrm{.}00$

December $31$

$2021$ financial data

Solo Inc.

$2021$ Financial Data

Credit Sales $-$ December $31$

$510,255\mathrm{.}00$

Cash Sales $-$ December $31$

$55,000\mathrm{.}00$

Other Income $-$ December $31$

$61,254\mathrm{.}00$

Interest Income $-$ December $31$

$5,640\mathrm{.}00$

Depreciation $-$ December $31$

$32,155\mathrm{.}00$

Rent $-$ December $31$

$16,895\mathrm{.}00$

Wages & Salaries $-$ December $31$

$206,523\mathrm{.}00$

Advertising $-$ December $31$

$15,000\mathrm{.}00$

Insurance $-$ December $31$

$23,525\mathrm{.}00$

Interest $-$ December $31$

$3,690\mathrm{.}00$

Income Taxes $-$ December $31$

$45,785\mathrm{.}00$

Inventory $-$ December $31$

$245,000\mathrm{.}00$

Accounts Receivable $-$ December $31$

$98,564\mathrm{.}00$

Prepaid Expenses $-$ December $31$

$9,875\mathrm{.}00$

Furniture & Equipment $-$ December $31$

$206,547\mathrm{.}00$

Accum Depreciation $($Furniture & Equipment$)-$ December $31$

$160,595\mathrm{.}00$

Income Tax Receivable $-$ December $31$

$5,497\mathrm{.}00$

Accounts Payable $-$ December $31$

$107,891\mathrm{.}00$

Salaries Payable $-$ December $31$

$35,000\mathrm{.}00$

Accrued Liabilities $-$ December $31$

$14,899\mathrm{.}00$

State Tax Payable $-$ December $31$

$3,514\mathrm{.}00$

Capital Stock $-$ December $31$

$450,000\mathrm{.}00$

Net cash provided by operating activities $-$ December $31$

$258,900\mathrm{.}00$

Net cash used by investing activities $-$ December $31$

$154,587\mathrm{.}00$

Net cash used by financing activities $-$ December $31$

$96,987\mathrm{.}00$

Cash $-$ December $1$

$482,184\mathrm{.}00$

Cost of Goods Available for Sale $-$ December $31$

$460,993\mathrm{.}00$

Retained Earnings $-$ December $1$

$210,511\mathrm{.}00$

$2022$ and $2023$ financial ratios

$2022$ and $2023$ Financial Ratios

$2022$

$2023$

Current Ratio

$2\mathrm{.}62$

$2\mathrm{.}00$

Operating Cash Flow Ratio

$0\mathrm{.}72$

$0\mathrm{.}72$

AR Turnover Ratio

$4\mathrm{.}03$

$4\mathrm{.}04$

Inventory Turnover Ratio

$1\mathrm{.}57$

$1\mathrm{.}90$

Return on Assets Ratio

$1\mathrm{.}00$

$1\mathrm{.}05$

Return on Sales Ratio

$1\mathrm{.}66$

$2\mathrm{.}03$

Total Debt to Total Equity Ratio

$0\mathrm{.}61$

$0\mathrm{.}66$

Note: Assume the following:

$$ The financial information provided to you is the only information available.

$$ The liquidity ratios provided in this project are the only available for decision$-$ making.

Question $1$:

Based on the financial statements of Solo Inc., make an income statement showing all calculations.