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nstructions:

The financial statements and industry standard ratios are listed below for a hypothetical firm. Complete the blue

section.

Compute the financial ratios for the firm $($columns C and D$).$

Compare both $2019$ and $2020$ ratios to the industry standards $($columns E and F$).$ Label "Good" if the firm's ratio is

favorable against the industry ratio. "Poor" if the ratio is unfavorable. See the examples in columns E and F$.$

Give a summary of the company's financial health. Is the company doing well financially? Why or why not? Use at

least $3$ data points to support your reasoning.

$3)$ type in your answer $\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|\}$

$\backslash$hline DATA & & $\backslash \backslash$

$\backslash$hline Balance Sheet & $2019$ & $2020\backslash \backslash$

$\backslash$hline Assets: & & $\backslash \backslash$

$\backslash$hline Cash & $\backslash (\backslash$$ $200\backslash )$ & $\backslash (\backslash$$ $150\backslash )\backslash \backslash$

$\backslash$hline Accts$/$Rec & $450$ & $425\backslash \backslash$

$\backslash$hline Inventory & $550$ & $625\backslash \backslash$

$\backslash$hline Current assets & $1,200$ & $1,200\backslash \backslash$

$\backslash$hline Plant and equip. & $2,200$ & $2,600\backslash \backslash$

$\backslash$hline Less: Acc dep & $1,000$ & $1,200\backslash \backslash$

$\backslash$hline Net plant and equip. & $1,200$ & $1,400\backslash \backslash$

$\backslash$hline Total assets & $\backslash (\backslash$$ $2,400\backslash )$ & $\backslash (\backslash$$ $2,600\backslash )\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

$\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|\}$

$\backslash$hline Liabilities and Owners' & & $\backslash \backslash$

$\backslash$hline Equity: & $2019$ & $2020\backslash \backslash$

$\backslash$hline Accts$/$Pay & $\backslash (\backslash$$ $200\backslash )$ & $\backslash (\backslash$$ $150\backslash )\backslash \backslash$

$\backslash$hline Notes Pay$-$Current & $0$ & $150\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{1\}\{|$c$|\}\{$ Current liabilities $\}$ & $200$ & $300\backslash \backslash$

$\backslash$hline Bonds & $600$ & $600\backslash \backslash$

$\backslash$hline Owners' equity & & $\backslash \backslash$

$\backslash$hline Common stock & $300$ & $300\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|\}$

$\backslash$hline Paid$-$in Capital & $600$ & $600\backslash \backslash$

$\backslash$hline Retained earnings & $700$ & $800\backslash \backslash$

$\backslash$hline Total owners' equity & $1,600$ & $1,700\backslash \backslash$

$\backslash$hline $\backslash$begin$\{$tabular$\}\{$l$\}$

Total liabilities and owners' $\backslash \backslash$

equity

$\backslash$end$\{$tabular$\}$ & & $\backslash \backslash$

$\backslash$hline owners' equity & $\backslash (\backslash$$ $2,400\backslash )$ & $\backslash (\backslash$$ $2,600\backslash )\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

$\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|\}$

$\backslash$hline Income Statement: & $2019$ & $\backslash (2020\backslash$quad $\backslash$cdots $\backslash )\backslash \backslash$

$\backslash$hline Sales & $\backslash (\backslash$$ $1,200\backslash )$ & $\backslash (\backslash$$ $1,450\backslash )\backslash \backslash$

$\backslash$hline COGS & $700$ & $850\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{1\}\{|$c$|\}\{$ Gross profit $\}$ & $500$ & $600\backslash \backslash$

$\backslash$hline Operating expenses & $30$ & $40\backslash \backslash$

$\backslash$hline Depreciation & $220$ & $200\backslash \backslash$

$\backslash$hline Net operating income & $250$ & $360\backslash \backslash$

$\backslash$hline Interest expense & $50$ & $64\backslash \backslash$

$\backslash$hline Net income before tax & $200$ & $296\backslash \backslash$

$\backslash$hline Taxes $\backslash ((21\backslash \%)\backslash )$ & $42$ & $62\backslash \backslash$

$\backslash$hline Net income & $\backslash (\backslash$$ $158\backslash )$ & $\backslash (\backslash$$ $234\backslash )\backslash \backslash$

$\backslash$hline & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$ Industry Standard Ratios

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