Question 1 In a meeting with the chief executive of Bowie's Electronic, the company's balance sheet and income statement for year ended in December 2020 were provided to you (see below). At the end of the meeting, you were asked to provide a report analyzing how Bowie's has performed compares with its industry. In order to complete the task, you have obtained a set of data from a leading financial review for the performance of the electric industry during 2020, and these data are show as follows: Ratio Industry average Current ratio 2.0 times Days sales outstanding 35 days (calculation is based on a 360-day year) Inventory turnover ratio 6.7 times Total asset turnover ratio 3.0 times Profit margin 1.2% Return on total assets 3.6% Return on common equity Debt ratio 60.0% 9.0% $ 129,000 84,000 Bowie's Electronic Company: Balance Sheet as of December 31, 2020 (in thousand) Cash $ 77,500 Accounts payable Receivables 336,000 Notes payable Inventories 241,500 Other current liabilities Total Current Assets $ 655,000 Total Current Liabilities Net fixed assets 292,500 Long-term debt Common equity Total Assets S 947,500 Total liabilities and equity 117,000 $ 330,000 256,500 361,000 $ 947,500 Bowie's Electronic Company: Income Statement for year Ended December 31, 2020 (in thousand) Sales $ 1,607,500 Cost of goods sold Materials $ 717,000 Labour 453,000 Heat, light, and power 68,000 Indirect labour 113,000 Depreciation 41.500 1.392.500 Total Assets 947,500 Total liabilities and equity 947,500 Bowie's Electronic Company: Income Statement for year Ended December 31, 2020 (in thousand) Sales $ 1,607,500 Cost of goods sold Materials 717,000 Labour 453,000 68,000 113,000 41.500 Heat, light, and power Indirect labour Depreciation Gross profit Selling expenses General and administrative expense Earnings before interest and taxes (EBIT) Interest expenses Earnings before taxes (EBT) Income taxes Net income 1.392.500 215,000 115,000 30,000 70,000 24,500 45,500 18.200 27,300 The following requirements are needed in your financial analysis report: a) Calculate the indicated ratios for Bowie's. b) Construct the extended Du Pont equation for both Bowie's and the industry c) Explain how these ratios can help the management to understand the financial performance of the company from the following four perspectives. Liquidity ratio Use of Asset ratio Leverage ratio Profitability ratio d) Outline Bowie's strengths and weaknesses comparing with the industry performance as reveal by your analysis