1. Zeta Pharmaceuticals

Scenario: Financial Statement Analysis

Data: Zeta Pharmaceuticals' financial statements for the year include:

• Net sales: $1,500,000
• Cost of goods sold: $700,000
• Operating expenses: $300,000
• Interest expense: $70,000
• Income tax expense: $150,000
• Beginning retained earnings: $400,000
• Ending retained earnings: $500,000

Requirements:

1. Prepare Zeta Pharmaceuticals' income statement and balance sheet.
2. Calculate Zeta Pharmaceuticals' gross profit margin and net profit margin.
3. Discuss the significance of gross profit margin and net profit margin in financial analysis.
4. Analyze Zeta Pharmaceuticals' liquidity and solvency ratios.
5. Evaluate Zeta Pharmaceuticals' profitability and financial performance.
6. Recommend strategies for improving Zeta Pharmaceuticals' financial health.