Totally confused. I followed the instructions given on YouTube to get the ratio, but don't understand if I am using the correct numbers or what is required to correctly answer the questions (a & b). Am I using the wrong formulas or numbers? Could you please provide the steps that I should be doing to get the answers

This activity helps students recognize the significant role accounting plays in providing financial information to management for decision making through the evaluation of financial statements. This experiential assignment requires students to use ratios to evaluate and analyze a company's liquidity, solvency, and profitability.

Two-Rivers Inc. (TRI) manufactures a variety of consumer products. The company's founders have run the company for thirty years and are now interested in retiring. Consequently, they are seeking a purchaser, and a group of investors is looking into the acquisition of TRI. To evaluate its financial stability, TRI was requested to provide its latest financial statements and selected financial ratios. Summary information provided by TRI is presented below.

TRI

Statement of Income

For the Year Ended November 30, Year 2

(In thousands)

Sales (net) $31,000

Costs & Expenses:

Cost of goods sold 17,600

Selling & Administrative expense 3550

Depreciation & Amortization expense 1890

Interest expense 900

Total costs & expenses 23,940

Income before taxes 7,060

Income taxes 2,900

Net Income $4,160

TRI

Balance Sheet

As of November 30

(In thousands)

Year 2 Year 1

Cash $400 $500

Marketable securities (at cost) 500 200

Accounts receivable (net) 3200 2900

Inventory 5800 5400.

Total current assets 9900 9000

Property, plant & equipment (net) 7100 7000

Total assets $17,000 $1600

Accounts payable $3700 $3400

Income taxes payable 900 800

Accrued expenses 1700 1400

Total current liabilities 6300 5600

Long-term debt 2000 1800

Total liabilities 8300 7400

Common stock $(1 par value) 2700 2700

Paid-in capital in excess of par 1000 1000

Retained earnings 5000 4900

Total stockholders equity 8700 8600

Total liabilities & stockholders equity $17000 $16000

Selected Financial Ratios

TRI TRI Industry

Year 1 Year 0 Average

Current ratio 1.62 1.61 1.63

Acid-test ratio 0.63 0.64 0.68

Times interest earned 8.50 8.55 8.45

Debt to equity 1.02 0.94 1.03

Inventory turnover 3.21 3.17 3.18

Required:

a. Calculate the select financial ratios for the fiscal year Year 2. (use MS word or excel but excel is more recommended)

b. Interpret what each of these financial ratios means in terms of TRI's financial stability and operating efficiency.

This is what I came up with in excel, but I am confused. I followed the instruction given on YouTube but don't understand what is required to correctly answer the questions (a & b). Am I using the wrong formulas or numbers?

TRI FINANCIAL RATIO YEAR 2

YEAR 2 YEAR 1 GCD NUM 1 NUM 2 RATIO

CASH $400 $500 100 4 5 4:5 4:5

MARKETABLE SECURITIES $500 $200 100 5 2 5:2 5:2

ACCOUNTS RECEIVABLE $3,200 $2,900 10 32 29 32:29

INVENTORY $5,800 $5,400 200 29 27 29:27

TOTAL CURRENT ASSETS $9,900 $9,000 900 11 10 11:10

PROPERTY,PLANT &EQUIP (NET) $7,100 $7,000 100 71 70 71:70

TOTAL ASSETS $17,000 $16,000 1000 17 16 17:16

ACCOUNTS PAYABLE $3,700 $3,400 100 37 34 37:34

INCOME TAX PAYABLE $900 $800 100 9 8 9:8

ACCRUED EXPENSES $1,700 $1,400 100 17 14 17:14

TOTAL CURRENT LIABILITIES $6,300 $5,600 900 7 6 7:6.22222222222222 9:8

LONG-TERM DEBT $2,000 $1,800 200 10 9 10:9

TOTAL LIABILITIES $8,300 $7,400 100 83 74 83:74

COMMON STOCK $(1 PAR VALUE) $2,700 $2,700 100 27 27 27:27 1:1

PAID-IN CAPITAL IN EXCESS OF PAR $1,000 $1,000 100 10 10 10:10 1:1

RETAINED EARNINGS $5,000 $4,900 200 25 25 25:24.5 50:49

TOTAL STOCKHOLDERS EQUITY $8,700 $8,600 100 87 86 87:86

TOTAL LIABILITIES & STOCKHOLDERS EQUITY $17,000 $16,000 17000 1 1 1:0.941176470588235 17:16