RNA Inc. manufactures a variety of consumer products. The company's founders have run the company for 30 years and are now interested in retiring. Consequently, they are seeking a purchaser who will continue its operations, and a group of investors, Morgan SA, is looking into the acquisition of RNA. To evaluate its financial stability and operating efficiency, RNA was requested to provide the latest financial statements and selected financial ratios. The following is summary information provided by RNA.
RNA
Income Statement
For the Year Ended November 30, 2019
(in thousands)
Sales (net)....................................................‚¬30,500
Interest income...................................................500
Total revenue..................................................31,000
Costs and expenses
Cost of goods sold...........................................17,600
Selling and administrative expenses........................3,550
Depreciation and amortization expense.....................1,890
Interest expense..................................................900
Total costs and expenses....................................23,940
Income before taxes..........................................7,060
Income taxes...................................................2,800
Net income...................................................‚¬ 4,260

Instructions
a. Calculate a new set of ratios for the fiscal year 2019 for RNA based on the financial statements presented.
b. Explain the analytical use of each of the six ratios presented, describing what the investors can learn about RNA's financial stability and operating efficiency.
c. Identify two limitations of ratio analysis.

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RNA Statement of Financial Position As of November 30 (in thousands) 2019 2018 € 7,100 € 7,000 Property, plant, & equipment (net) Inventory 6,000 5,400 Accounts receivable (net) 3,200 2,900 Marketable securities (at cost) 300 200 Cash 400 500 Total current assets 9,900 9,000 €17,000 €16,000 Total assets Share capital-ordinary (€1 par value) € 2,700 € 2,700 Share premium-ordinary 1,000 1,000 Retained earnings 5,000 4,900 Total equity 8,700 8,600 Long-term debt 1,800 2,000 Accrued expenses 1,400 1,700 Income taxes payable 900 800 Accounts payable 3,700 3,400 6,300 Total current liabilities 5,600 Total equity and liabilities €17,000 €16,000 SELECTED FINANCIAL RATIOS RNA Current Industry Average 2018 2017 Current ratio 1.61 1.62 1.63 Acid-test ratio .64 .63 .68 Times interest earned 8.55 8.50 8.45 Profit margin on sales 13.2% 12.1% 13.0% Asset turnover 1.84 1.83 1.84 Inventory turnover 3.17 3.21 3.18