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 Cydes Corporation financial ratios for the years 2019 and 2020. (6 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 31" 2020 using the indirect method. (4 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. (3 marks) Ashmont Cycles Balance Sheet As of December 31, 2019 and 2020 2019 2020 $8,000 $3,368 $2,500 $2,200 $65,000 $71,500 $1,500 $1,800 $500 $600 $77,500 $79,468 $12,000 $17,400 ($2,400) ($3,480) $9,600 $13,920 $87,100 $93,388 Assets Cash Accounts receivable Inventory Prepaid expenses Other current assets Total current assets Property, plant, and equipment Accumulated depreciation Net property, plant, and equipment Total Assets Liabilities Accounts payable Line of credit Current portion of long-term debt Accrued expenses Total Current Liabilities Long-term debt Total Liabilities Owner's Equity Contributed capital Retained earnings Total Owner's Equity $3,000 $3,200 $10,000 $10,000 $4,000 $4,000 $1,100 $1,100 $18,100 $18,300 $16,000 $12,000 $34,100 $30,300 $50,000 $50,000 $3,000 $13,088 $53,000 $63,088 Ashmont Cycles Income Statement 2020 2019 Sales $205,000 $155,000 Cost of goods sold (106,000) (85,000) Gross Profit 99,000 70,000 Operating Expense: Selling, general and administrative expenses (58,000) (40,000) Utilities expense (6,960) (5,000) Rent expense (16,240) (10,000) Depreciation and amortization (1,080) (1,080) Total operating expenses (82.280) (56,080) Operating Income 16,720 13,920 Interest expense (1,200) (1,200) Income before Income Taxes 15,520 12,720 Income taxes (35%) (5,432) (4,452) Net Income $10,088 $8,268