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b. What does Economt $ 4,500 (2.800) $1,700 4-17 (Ratio analysis) Artz, Inc.'s financial statements for 2015 are sho Sales Cost of goods sold Gross profits Operating expenses $(1,000) (200) $(1200) $ 500 Marketing, general, and administrative expenses Depreciation expense Total operating expenses Operating profits Interest expense $ 440 Earnings before taxes (taxa ble income) Income taxes Net Income Liabilities (Debt) and Equity s 500 600 Accounts receivable Inventories $2,000 2,100 Total current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets Liabilities (Debt) and Equity Accounts payable Short-term notes payable Total current liabilities Long-term debt Total liabilities 500 800 1,200 500 Common stock (par and paid-in capital) Retained earnings Total common equity Total liabilities and equity The chief financial officer for Artz has acquired industry averages for the following ratios: Current ratio 3.0 1.50 40.0 70.2 12.5% 80% 1.6 3.1 330% Acid-test ratio Days in receivables Days in inventories Operating return on assets Operating profit margin Total asset turnover Fixed-asset turnover Debt ratio Times interest earned 6.0 11.0% Return on equity a. Compute the ratios listed above for Artz. b. Compared to the industry: 1. How liquid is the firm? 2. Are its managers generating an attractive operating profit on the firm's assets? 3. How is the firm financing its assets? 4. Are its managers generating a good return on equity

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