1. Calculate liquidity, activity, leverage, and profitability ratios for On Goal.

The popularity of soccer as a participation sport attracted Leo Hernandez and Gil Ferguson to open an indoor soccer arena with retail shops selling soccer related merchandise. Last year's financial statements for their business On Goal are shown here. Leo and Gil are hoping to expand their business by opening another facility. However, before they approach banks or potential investors, they need to look closely at what the accounting statements show them.

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Balance Sheet December 31,20 ASSETS Current Assets: Accounts Receivable Merchandise Inventory Prepaid Expenses Total Current Assets $7,120 2 400 18,200 3,040 $40,760 Fixed Assets: Fixtures Less Accumulated Depreciation Building Less Accumulated Depreciation Equipment Less Accumulated Depreciation $16,800 3,600 78,000 7800 12,000 4,000 Total Fixed Assets $31,400 $132,160 TOTAL ASSETS: LIABILITIES/EQUITY Current Liabilities Accounts Payable Notes Payable Contracts Payable Total Current Lia bilities $6,000 4,000 8,000 $18,000 Fixed Liabilities: Owners Equity: TOTAL LIABILITIES/EQUITY: Long-term Note Payable $75,000 Shares Held by Hernandez and Ferguson $39,160 $132,160 OnGoal Income Statement Year Ended December 31, 20- $178,000 Cost of Goods Sold: Beginning Inventory, January 1 Purchases Duing Year Less Ending Inventory, December 31 $18,000 22,000 18,200 Cost of Goods Sold $21,800 GROSS MARGIN $156,200 Operating Expenses: Payment on Building Note Salaries Supplies Advertising/Promotion Insurance Expense Utilities Expense Miscellaneous Expenses Total Operating Expenses $34.000 68,000 7460 3,000 18,000 10,000 4,000 $144,460 NET PROFIT FROM OPERATIONS $11,740