(a) Analyze Zagloba using Ratio Analysis. Compute the Ratios below for Zagloba and compare them to the industry data that is given. Discuss the weak points, strong points, and what you think should be done to to improve the company's performance. (20 Points) Ratios Zagloba Profit margin Return on assets Return on equity Receivables turnover ..... Inventory turnover Fixed-asset turnover. Total-asset turnover Current ratio.. Quick ratio Debt to total assets. Interest coverage. Fixed charge coverage Industry 5.75% 6.90% 9.20% 4.35X 6.50X 1.85% 1.20X 1.45X 1.10X 25.05% 5.35X 4.62X (b) In your analysis, calculate the overall break-even point in sales dollars and the cash break- even point. Also compute the degree of operating leverage, degree of financial leverage, and degree of combined leverage. (Use footnote 2 for DOL and footnote 3 in the chapter for DCL.) (10 points) (c) Use the information in parts a and b to discuss the risk associated with this company. Given the risk, decide whether a bank should loan funds to Zagloba. (10 points) (d) Zagloba Company is trying to plan the funds needed for 2014. The management anticipates an increase in sales of 20 percent, which can be absorbed without increasing fixed assets. What would be Zagloba's needs for external funds based on the current balance sheet? Compute RNF (required new funds). Notes payable (current) and bonds are not part of the liability calculation. (10 points) Assets Cash Marketable securities Accounts receivable Inventory Gross plant and equipment Less Accumulated depreciation Zagloba COMPANY Balance Sheet December 31, 2014 Liabilities and Stockholders' Equity $ 60,000 Account payable $2,100,000 70,000 Accrued expenses 50,000 2,100,000 Notes payable (current) 200,000 900,000 Bonds (10%) 2,900,000 7,000,000 Common stock (1.7 million 1,700,000 shares, par value $1) 2,000,000 Retained earnings 1,180,000 Total liabilities and $8,130,000 $8,130,000 stockholders' equity Total assets Income Statement-2014 Sates (credit) Fixed costs* Variable costs (0.60).. Earnings before interest and taxes. Less: Interest.. Earnings before taxes Less: Taxes @ 35%. Earnings after taxes Dividends (40% payout). Increased retained earnings $6,000,000 1,000,000 4,200,000 800,000 250,000 550,000 192,500 $ 357,500 143,000 $ 214,500 *Fixed costs include (a) lease expense of $200,000 and (b) depreciation of $500,000