Suppose you are interested in evaluating Ashmont Cycles Corporation. Given the corporation's income statement and balance sheet, answer the following questions: 1. Calculate the Ashmont Cycles Corporation financial ratios for the years 2019 and 2020. (3 marks) 2019 2020 Financial ratio Current ratio Inventory turnover Average collection period Total asset turnover Debt ratio Debt to equity ratio Times interest earned ratio Gross profit margin Operating profit margin Net profit margin Return on Assets(ROA) Return on equity (ROE) 2. Analyze the overall financial situation from a time-series viewpoint. Break your analysis into an evaluation of the firm's liquidity, activity, debt, and profitability. (2 marks) 3. Prepare the cash flow statement for Ashmont Cycles Corporation for the year ended December 31st 2020 using the indirect method. (3 marks) 4. Ashmont Cycles Corporation estimates its sales for the 2021 financial year will be $500,000. No new borrowing was obtained and therefore, the interest expense will remain unchanged $1,200 during 2021. Compile the Pro forma Income statement for Ashmont Cycles Corporation for the year 2021 using percent of sales method. 62marks) Ashmont Cycles Balance Sheet As of December 31, 2019 and 2020 2019 2020 Assets Cash 8,000 9,000 Accounts receivable 2,500 7,000 Inventory 67,000 70,000 Prepaid expenses 1,500 4,100 Other current assets 500 700 Total current assets 79,500 90,800 Property, plant, and equipment 29,000 49,000 Accumulated depreciation (2,400) (4.800) Net property, plant, and equipment 26,600 44,200 Total Assets $ 106,100 $ 135,000 Liabilities Accounts payable 3,000 4,000 Line of credit 10,000 10,000 Current portion of long-term debt 6,000 5,000 Accrued expenses 1,100 2.000 Total Current Liabilities 20,100 21,000 Long-term debt 16,000 14,000 Total Liabilities $ 36,100 $ 35,000 Owner's Equity Contributed capital 50,000 60,000 Retained earnings 20,000 40,000 Total Owner's Equity $ 70,000 $ 100,000 Ashmont Cycles Income Statement For the year ended December 31, 2019 and 2020 2019 2020 $177,000 (90,000) 87,000 $300,000 (100,000) 200,000 Sales Cost of goods sold Gross Profit Operating Expense: Selling, general and administrative expenses Utilities expense Rent expense Depreciation and amortization Total operating expenses Operating Income Interest expense Income before Income Taxes Income taxes (35%) Net Income (20,000) (4,000) (10,000) (2,400) (36,400) 50,600 (1,200) 49,400 (17,290) $32,110 (50,000) (3,500) (14,000) (2,400) (69.900) 130,100 (1,200 128,900 (45,115) $83,785