You are a assistant loans officer for a large Canadian bank. Galaxy Corporation has approached the bank about securing a loan of $1,000,000 to purchase new equipment for its manufacturing plant. You have been asked by the senior manager on the account to provide a review of Galaxy Corporations most recent financial statements, which are provided below. The manager would like you to provide a quantitative analysis of the companys financial performance over the past two years. Question 2 (continued) Galaxy Corporation Statement of Financial Position As at December 31st Assets 2021 2020 2019 Cash $313,000 $287,000 $222,000 Marketable securities $25,000 29,000 $7,000 Accounts receivable (net) 397,000 362,000 341,000 Inventory 310,000 285,000 244,000 Total current assets 1,045,000 963,000 814,000 Property, plant & equipment 4,894,000 4,433,000 3,731,000 Accumulated depreciation -814,000 -834,000 -666,000 Total assets $5,125,000 $4,562,000 $3,879,000 Liabilities Accounts payable $405,000 $336,000 $285,000 Interest payable 24,000 21,000 15,000 Dividends payable 105,000 57,000 42,000 Total current liabilities 534,000 414,000 342,000 Long-term debt 2,878,000 2,975,000 2,550,000 Total liabilities 3,412,000 3,389,000 2,892,000 Shareholders Equity Common shares $805,000 $561,000 $518,000 Retained earnings 908,000 612,000 469,000 Total shareholder equity 1,713,000 1,173,000 987,000 Total liabilities and shareholders equity $5,125,000 $4,562,000 $3,879,000 1 Question 2 (continued) Galaxy Corporation Income Statement For the years ended December 31st 2021 2020 Revenue $4,147,000 $3,412,000 Cost of goods sold 2,282,000 1,705,000 Gross profit 1,865,000 1,707,000 Operating expenses: General and administrative 551,000 405,000 Rent 228,000 205,000 Depreciation 445,000 373,000 Total operating expenses 1,224,000 983,000 Operating income 641,000 724,000 Non-operating items: Interest expense 144,000 178,000 Loss on sale of property 23,000 - Total non-operating items 167,000 178,000 Income before tax expense 474,000 546,000 Tax expense 104,000 120,000 Net income $370,000 $426,000 Industry Information The following ratios are industry averages for the industry Galaxy operates in: Current ratio: 2.00 Quick ratio: 1.25 Accounts receivable turnover: 10.0 Inventory turnover: 6.0 Net debt/shareholder equity: 100% Gross margin: 55% Return on equity: 28% Return on assets:12%

Required: Prepare a report that analyzes and discusses the performance of Galaxy Corporation in 2021 compared to previous years and to industry averages. The report should include a complete analysis, including liquidity, activity, solvency, and profitability along with qualitative analysis. Also, identify any possible areas of concern and provide any recommendations you deem appropriate