1. Calculating financial ratios: Using the financial statements provided and the material you have studied, calculate the following financial ratios (ratios). Be sure to detail the procedure and result for each financial reason.
   1. Liquidity ratios
   2. Reasons for debt management
   3. Profitability ratios

ABC Corporation
Income Statement
For the year ended December 31, 202X
Revenues:
Gross Sales			$ 1,800,000
Minus: Sales discounts		$ (325,000)
Sales returns and allowances		(300,000)	(625,000)
Net sales			$ 1,175,000
Cost of goods sold:
Beginning inventory		$ 1,200,000
Purchases	$ 500,000
Minus: Purshases returns and discounts	(100,000)
Net purchases	$ 400,000
Transportation-in	50,000	450,000
Goods available for sale		$ 1,650,000
Minus: Ending inventory		(900,000)
Cost of goods Sold			(750,000)
Gross profit			$ 425,000
Operating expenses:
Selling expenses:
Sales, salaries, and commissions	$ 58,000
Freight-out	5,000
Travel	25,000
Advertising	10,000
Office supplies	12,000	$ 110,000
General and administrative expenses:
Executives salaries	$ 50,000
Professional salaries	7,000
Wages of office staff	19,000
Depreciation	7,000
Office supplies	5,000	$ 88,000
Total operating expenses			(198,000)
Income from operations			$ 227,000
Other revenues and gains:
Gain on investments		$ 350,000
Dividend revenues		250,000	$ 600,000
Other expenses and losses:
Interest expense		$ 124,000
Loss on disposal of equipment		70,000	(194,000)
Income before taxes			$ 633,000
Income tax expense			(75,960)
Net income			$ 557,040
Earning Per share (20,000 share Outstanding)			$ 27.85

1. 1.