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Income statement

sales revenue	160, 000
less: cost of a good sold	106,000
gross profif	54, 000
es: operating expenses
selling expenses	16,000
general and administrative expenses	10,000
lease expense	1,000
depreceation expense	10,000
total operating expense	37,000
operating profit	17,000
es:interest expense	6,100
net profits before taxes	10,900
es:taxes	4,360
net profits after taxes	6,450

Balance sheet

Assets
cash	500
Marketable securities	1, 000
Accounts receivable	25,000
inventories	45,500
Total currents assets	72,000
Land	26,000
Buildings and equipment	90,000
Less: accumulated depreciation	38,000
Net fixed assets	78,000
Total assets	150,000
Liabilities and stockholders equity
Account payable	22,000
Notes payable	47,000
Total current liabilities	69,000
Log-term debt	22, 950
Common stock*	31,500
Retained earings	26,550
Total liabilities and stockholders equity	150,000

• The firms 3,000 outstanding shares of common stock closed 2019 at a price of $25 per share

Instructions:

1. Prepare a common-size statements for the Income Statement
2. Use the preceding financial statements to complete the following table. Assume the industry averages given in the table are applicable for both 2018 and 2019
3. Analyze the results and explain the company changes during both years.

Ratio	Industry average	Actual 2018	Actual 2019
Current ratio	1.80	1.84
Quick ratio	0.70	0.78
Inventory turover*	2.50	2.59
Number of days sales in inventory	37.5 days	36.5 days
Times Interest earned ratio	3.8	4.0
Gross profit margin	38%	40%
Net profit margin	3.5%	3.6%
Return on total assets	4.0%	4.0%
Return on common equity	9.5%	8.0
Market/bookratio	1.1	1.2

*Based on a 365-day year and on end-of-year figures.

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