Consider the following financial statements for Nixon Company.

During the year, management obtained additional bond financing to enlarge its production facilities. The plant addition produced a new high-margin product, which is supposed to improve the average rate of gross profit and return on sales.

As a potential investor, you decide to analyze the financial statements:

Required

a. Calculate the following for each year: current ratio, quick ratio, operating-cash-flow-to-currentliabilities ratio (current liabilities were \(\$ 40,000,000\) at January 1,2018 ), inventory turnover (inventory was \(\$ 68,000,000\) at January 1,2018 ), debt-to-equity ratio, times-interest-earned ratio, return on assets (total assets were \(\$ 490,000,000\) at January 1, 2018), and return on common stockholders' equity (common stockholders' equity was \(\$ 265,000,000\) at January 1,2018 ).

b. Calculate common-size percentage for each year's income statement.

c. Comment on the results of your analysis.

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NIXON COMPANY Balance Sheets (Thousands of Dollars) Dec. 31, 2019 Dec. 31, 2018 Assets Cash.... Accounts receivable (net). Inventory..... Prepaid expenses... Plant and other assets (net). Total assets Liabilities and Stockholders' Equity Current liabilities... 9% bonds payable 8% preferred stock, $50 par value Common stock, $10 par value Retained earnings Total liabilities and stockholders' equity. $ 25,000 39,000 105,000 $ 18,100 21,400 72,000 1,500 4,000 463,500 427,500 $634,000 $ 80,000 187,500 60,000 225,000 $543,000 $ 48,000 150,000 60,000 225,000 81,500 60,000 $634,000 $543,000