1. In 2016, the improvement in ABC's return on equity occurred because 2. Since 2015, ABC's liquidity has and 3. Since 2015, ABC's inventory management has

203 Key Ratios for ABC Inc and Its Industry ABC Inc. 2015 Ratios lacustry Average Ratios 2016 Current ratio 1.2 14 Acid test ratio 0.89 0.94 Average collection period 30 days 25 days Torventory tumover 18.1 Fixed assets turnover 4.1 48 Total asset tumover 2.78 28 Debt ratio 50% 60 Times-interesteamed 3.5% 4.5% Net profit margin 1.15% 1.5% Return on equity 5.21% 7.32% ABC, Inc. Tome Staterest in thousands) December 31, 2016 Sales (all credit) $200,000 Cost of goods sold 140.000 Gross profit o salos 60,000 Operating expenses $6,000 Operating income 4,000 Interest expense 1.000 Earnings before tax 3,000 Incetax Net income available to commuca stockholders 31.950 ABC, Inc. Ialance Sheet (in thousands) December 31, 2016 Assets Casba $2,000 Accounts receivable 17,800 Investories 8.700 Total current sets 28.500 Gross fixed assets 70,000 Accumulated depreciation 26.500 Net fixed assets 43.500 Total assets $22.000 Liabilines and Equity Accounts payable $18,000 Accruals 13.350 Total current liabilities 31.350 Long-term debt 3.250 Total liabilities 39,600 Common stock (par value and paid in capital) 2,000 Retained earnings 30.400 Total stockholders' equity 32.400 Total liabilities and equity $22.000