The financial statements of Sharif Industries for the year ended December 31, 2018 follow.

Income statement

Sharif Industries

For the year ended December 31, 2018

Sales revenue Rs. 160,000

Less: cost of goods sold 106,000

Gross profit 54000

Less: operating expenses

Selling expenses 16,000

General and administrative expenses 11,000

Depreciation expense 10,000

Total operating expenses 37,000

Operating profits 17,000

Less: interest expense 6,100

Net profit before taxes 10,900

Less: taxes (40%) ?

Net profit after taxes ??

Balance Sheet

Sharif Industries

December 31, 2018

Assets

Cash Rs. 500

Marketable securities 1,000

Accounts receivables 25,000

Inventories 45,500

Total current assets ?

Land 26,000

Buildings and equipment 90,000

Less: accumulated depreciation 38,000

Net fixed assets ?

Total assets ??

Liabilities and stockholders' equity

Accounts payable Rs. 22,000

Notes payable 47,000

Total current liabilities ?

Long-term loan 22,950

Common stock 31,500

Retained earnings ?

Total liabilities and stockholders' equity 150,000

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Page 4 of 4

i. Use the preceding financial statements to complete the following table. Assume that

the industry averages given in the table are applicable for both 2017 and 2018.

ii. Analyze Sharif Industries' financial condition as it relates to (1) liquidity, (2) activity,

(3) debt, and (4) profitability. Summarize the company's overall financial condition.

Table A

Ratio Industry average Actual 2017 Actual 2018

Current ratio 1.80 1.84

Quick ratio 0.70 0.78

Inventory turnover 2.50 2.59

Average collection period(#) 37 days 36 days

Debt ratio 65% 67%

Times interest earned ratio 3.8 4.0

Gross profit margin 38% 40%

Net profit margin 3.5% 3.6%

Return on total assets 4.0% 4.0%

Return on equity 9.5% 8.0%