The financial statements of Flowers Co. appear below:

Flowers Co.

Comparative Balance Sheets

December 31, 2018 - 2019

Assets 2019 2018

Cash $ 75,000 $ 150,000

Short-term investments 75,000 225,000

Accounts receivable (net) 150,000 112,500

Inventory 225,000 262,500

Property, plant and equipment (net) 975,000 1,125,000

Total assets $1,500,000 $1,875,000

Liabilities and stockholders' equity

Accounts payable $ 75,000 $ 112,500

Short-term notes payable 150,000 337,500

Bonds payable 300,000 600,000

Common stock 562,500 562,500

Retained earnings 412,500 262,500

Total liabilities and stockholders' equity $1,500,000 $1,875,000

Flowers Co.

Income Statement

For the Year Ended December 31, 2019

Net sales $1,500,000

Cost of goods sold 937,500

Gross profit 562,500

Expenses

Operating expenses $157,500

Interest expense 67,500

Total expenses 225,000

Income before income taxes 337,500

Income tax expense 101,250

Net income $ 236,250

Required:

a. Using the financial statements, compute the following ratios for Flowers Co. for 2019. Show all computations. (4 marks)

1. Current ratio.

2. Acid-test ratio.

3. Accounts receivable turnover.

4. Inventory turnover.

5. Profit margin.

6. Return on assets.

7. Assets turnover.

8. Times interest earned.

9. Working capital.

10. Debt to assets ratio.

b. Prepare a vertical analysis of the 2019 income statement data for Flowers Co. (2 marks)

c. Based on the ratios calculated in (a), and the vertical analysis in (b), discuss briefly the improvement or lack thereof in financial position and operating results from 2018 to 2019 of Flowers Co. (2 marks)