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4. Safety-First, Inc. makes portable ladders that can be used to exit second floor levels of homes in the event of fire. Each ladder consists of fire resistant rope and high strength plastic steps. A lightweight fire resistant cape with a smoke filter is included with Safety-First ladder. Each ladder and cape, when not in use, are rolled up and stored in a pouch the size of a back pack and can easily be taken on trips and vacations Jan Smithson founded Safety-First as soon as she graduated from a private liberal arts college in the northwest three years ago. After struggling for the first year, the venture seemed to be growing and producing profits. Following are the two most recent years of financial statements, expressed in thousands of dollars, for the Safety-First, Inc. SAFETY-FIRST, INC. Income Statements (In S Thousands) Net sales Cost of woods sold Gross profit Operating expenses Interest Income before taxes Income taxes Net income 2019 3.750 2.250 1.500 620 30 800 250 SSD 2020 4.500 2.200 1.800 860 40 900 200 600 Balance Sheets (in S Thousands) 2019 400 500 Cash Accounts receivable Inventories Total current assets Gross fixed assets Less accumulated depreciation Net fixed assets Total assets 2.350 2.000 -950 LOSO 3,400 2020 150 800 2020 2.950 2.800 -1.250 1.550 4.500 Accounts payable Bank loan Accrued liabilities Total current liabilities Long-term debat Common stock Retained earnings Total liabilities and equity 300 150 100 SSO 150 850 1.850 3,400 400 250 150 800 150 1.100 2.450 4.500 A. Using yearend data, calculate the inventory-to-sale conversion period, the sale-to-cash conversion period, and the purchase-to-payment conversion period for 2019 and 2020. B. Determine the cash conversion cycle for each year and discuss the changes, if any that took place. 5. [ROE Component Ratios and Model] Return to the financial statements data provided in Problem 4 for the Safety-First Corporation. A. Use the results from Part A to calculate the venture's return on equity in each year. B. Describe what happened in terms of the financial performance of the Safety-First, Inc. between 2019 and 2020. 6. [Profitability Ratios) Make use of the financial statements data provided in Problem 4 for Safety-First, Inc. A. Calculate the operating profit margins and the NOPAT margins in 2019 and 2020 for Safety-First, Inc. What changes occurred? B. Calculate the operating return on assets (or the venture's basic earning power) using year-end balance sheet information for both 2019 and 2020. Describe what happened in terms of operating return performance. C. Did the venture benefit from using interest-bearing debt in the form of bank loans and long-term debt in 2019 and 2020

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