Ricardo Martinez has prepared the following financial statement projections as part of his business plan for starting the Martinez Products Corporation. The venture is to manufacture and sell electronic components that make standard overhead projectors "smart." In essence, through voice commands a projector can be turned on, off, and the brightness of the projection altered. This will allow the user to avoid audience annoyances associated with a bright projection light during periods when no overhead transparency is being used. Venture investors usually screen prospective venture opportunities in terms of projected profitability and financial performance.

A. Use the following projected financial statements for Martinez Products to calculate financial ratios showing the venture's projected

(a) Gross profit margin,

(b) Net profit margin,

(c) Asset intensity, and

(d) ROA.

B. The ratios calculated in Part A are found in the venture opportunity screening guide discussed in the chapter. Rate the potential attractiveness of the Martinez Products venture using the guidelines for the pricing/profitability factor category for the VOSIndicatorâ„¢.

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MARTINEZ PRODUCTS CORPORATION PROJECTED INCOME STATEMENT FOR YEAR 1 Sales Cost of goods sold Gross profit Operating expenses Depreciation Eamings before interest and taxes Interest Eamings before taxes Taxes (25%) Net income $200,000 100,000 100,000 75,000 4,000 21,000 1,000 20,000 5,000 15,000 MARTINEZ PRODUCTS CORPORATION PROJECTED BALANCE SHEET FOR END OF YEAR 1 10,000 20,000 20,000 50,000 54,000 4,000 50,000 $100,000 Cash Accounts receivable Inventories Accounts payable Accrued liabilities Bank loan Total curent liabilities Common stock Retained eamings Total equity Total liabilities and equity 15,000 10,000 10,000 35,000 50,000 15,000 65,000 $100,000 Total current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets