Williams Company is a manufacturer of auto parts having the following financial statements for 2018€“2019.

Required Calculate and interpret the financial ratios for Williams for both years. Because the calculation of many ratios requires the average balance in an account (e.g., average receivables is required in calculating receivables turnover), you may assume for simplicity that the balances in these accounts in 2018 are the same as those in 2017.

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Balance Sheet December 31, 2019 2018 $ 260,000 150,000 $ 135,000 225,000 Cash Accounts receivable 385,000 $ 795,000 1,640,000 $2,435,000 Inventory 175,000 $ 535,000 Total current assets Long-lived assets 1,500,000 $2,035,000 Total assets $ 200,000 900,000 $ 175,000 800,000 1,060,000 $2,035,000 Current liabilities Long-term debt Shareholders' equity Total debt and equity 1,335,000 $2,435,000 Income Statement For the Years Ended December 31, 2019 2018 $3,500,000 2,500,000 1,000,000 500,000 500,000 $3,600,000 2,600,000 1,000,000 450,000 550,000 Sales Cost of sales Gross margin Operating expenses Operating income Тахes 175,000 192,500 Net income $ 325,000 $ 357,500 Cash Flow from Operatlons 2019 2018 $ 357,500 50,000 $325,000 60,000 (135,000) 25,000 Net income Plus depreciation expense + Decrease (-increase) in accounts receivable and inventory + Increase (-decrease) in current liabilities Cash flow from operations $275,000 $ 407,500 *Operating expenses include depreciation expense. Additional financial information, including industry averages for 2019, where appropriate, includes: 2019 2018 Industry 2019 Capital expenditures $125,000 $100,000 Income tax rate 35% 35% 35.0% $60,000 $50,000 $2.25 1,800,000 $50,000 $50,000 $2.75 1,800,000 Depreciation expense Dividends Year-end stock price Number of outstanding shares Sales multiplier Free cash flow multiplier Earnings multiplier Cost of capital 25.00 1.50 18.00 9.00 5.0% 5.0% Accounts receivable turnover 11.10 Inventory turnover Current ratio 10.50 2.30 Quick ratio 1.90 Cash flow from operations ratio 1.20 Free cash flow ratio 1.10 Gross margin percentage Return on assets (net book value) Return on equity 30.0% 20.0% 30.0%