Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2016, financial statements:

For the Year Ended December 31, 2016:

Net revenues.......................................................$ 64,400

Cost of services provided ................................ 22,800

Depreciation expense ....................................... 13,000

Operating income ...........................................$ 28,600

Interest expense ............................................. 7,600

Income tax expense ......................................... 6,400

Net income .....................................................$ 14,600

At December 31, 2016:

Assets

Cash and short-term investments .................... $ 5,600

Accounts receivable, net ................................. 19,600

Property, plant, and equipment, net................. 154,800

Total assets......................................................$180,000

Liabilities and Stockholders' Equity

Accounts payable ........................................... $ 3,000

Income taxes payable ..................................... 3,200

Notes payable (long term) .............................. 95,000

Paid-in capital ................................................ 20,000

Retained earnings ............................................. 58,800

Total liabilities and stockholders' equity ...........$180,000

At December 31, 2015, total assets were $164,000 and total stockholders' equity was $65,200. There were no changes in notes payable or paid-in capital during 2016.

Required:

a. The cost of services provided amount includes all operating expenses (selling, general, and administrative expenses) except depreciation expense. What do you suppose the primary reason was for management to separate depreciation from other operating expenses? From a conceptual point of view, should depreciation be considered a "cost" of providing services?

b. Why do you suppose the amounts of depreciation expense and interest expense are so high for Gerrard Construction Co.? To which specific balance sheet accounts should a financial analyst relate these expenses?

c. Calculate the company's average income tax rate.

d. Explain why the amount of income tax expense is different from the amount of income taxes payable.

e. Calculate the amount of total current assets. Why do you suppose this amount is so low, relative to total assets?

f. Why doesn't the company have a Merchandise Inventory account?

g. Calculate the amount of working capital and the current ratio at December 31, 2016. Assess the company's overall liquidity.

h. Calculate ROI (including margin and turnover) and ROE for the year ended December 31, 2016. Assess the company's overall profitability. What additional information would you like to have to increase the validity of this assessment?

i. Calculate the amount of dividends declared and paid during the year ended December 31, 2016.