Condensed statement of financial position and income statement data for Pronghorn Ltd. are shown below:

Instructions
(a) Calculate the receivables turnover ratio, inventory turnover ratio, and current ratio for all three years. Assume that the accounts receivable and inventory balances at the end of 2015 were equal to the balances at the end of 2016. The company does not have an allowance for doubtful accounts and all sales are on credit. Conclude on whether the company's liquidity has improved or worsened over this three-year period and support your explanation by relating the results of the turnover ratios to the current ratio.
(b) Calculate the gross profit margin for each year. The costs paid for inventory purchased from suppliers have changed little over the three years but there is significant competition in the industry. How has this affected this ratio?
(c) Calculate the profit margin ratio. Why has this ratio changed over the three years? Incorporate in your answer any conclusions you made when analyzing the gross profit margin in part (b) above.
(d) Calculate the debt to total assets ratio and the times interest earned ratio for all three years. What strategy pertaining to leverage has the company pursued? Is the company more or less solvent in 2018 than it was in 2016?
(e) The company paid all dividends as soon as they were declared and has only issued common shares. There are no preferred shares. Retained earnings at the beginning of 2016 were $1.3 million. Calculate the cash dividends declared and dividend payout ratio for each year. Why has the payout ratio changed? Do you think that the dividend payout has affected the company's liquidity? Why or why not?
(f) Calculate the asset turnover for each of the three years. Assume that total assets at the end of 2015 were equal to total assets at the end of 2016. Multiply the asset turnover for each year by the profit margin for each year from part (c) above to determine the return on assets for each year. What is the major driver of the company's return on assets?
(g) Calculate the return on common shareholders' equity for each year. Assume that common shareholders' equity at the end of 2015 was equal to that amount for 2016. Why is the return on common shareholders' equity different from the return on assets? Why does the difference between these two ratios change?

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PRONGHORN LTD Statement of Financial Position December 31 (in thousands) 201820172016 Assets Current assets Cash Accounts receivable Inventory Average current assets Property, plant, and equipment (net)4,100 Total assets 30 $ 80 200 00 70o 500 1,200 800 500 2,130 1,580 1,200 3,200 $6,230 $5,380 $4,400 3,800 ia Liabilities Current liabilities Non-current liabilities Total liabilities Shareholders' equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $6,230 $5,380 $4,400 ies 1o $ 600 550 $ 500 3,070 2,3201,500 3,670 2,8702,000 1,0001,0001,000 1,560 1,510 1,400 2,560 2,510 2,400 PRONGHORN LTD Statement of Financial Position December 31 (in thousands) 2018 2017 2016 $4,500 $4,000 $3,600 2,500 2,1001,800 2,000 1,9001,800 1,450 1,4751,490 550 425310 0 Income before income tax 360295 240 60 $ 270 220 $ 180 Sales (all on credit) Cost of goods sold Gross profit Operating expenses ncome from operations Interest expense 190 130 Income tax expense Net income 90 75