ABC Company is a manufacturing firm that produces and sells electronic goods. You have recently been hired

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Question:

ABC Company is a manufacturing firm that produces and sells electronic goods. You have recently been hired as the company's management accountant, and your first task is to analyze the financial performance of the company for the year ended December 31, 2023. The company has provided you with the following information:

1. Income Statement for the Year Ended December 31, 2023:

Sales Revenue: $5,000,000
Cost of Goods Sold: $3,200,000
Gross Profit: $1,800,000
Operating Expenses: $1,000,000
Operating Income: $800,000
Interest Expense: $100,000
Net Income: $600,000

2. Balance Sheet as of December 31, 2023:

Current Assets:
- Cash: $200,000
- Accounts Receivable: $400,000
- Inventory: $600,000

Non-Current Assets:
- Property, Plant, and Equipment: $2,000,000
- Accumulated Depreciation: $800,000

Current Liabilities:
- Accounts Payable: $300,000
- Short-term Debt: $200,000

Non-Current Liabilities:
- Long-term Debt: $1,000,000

Shareholders' Equity:
- Common Stock: $500,000
- Retained Earnings: $1,200,000

3. Additional Information:

- The company paid dividends of $200,000 during the year.
- The company's income tax rate is 30%.
- ABC Company had 100,000 common shares outstanding throughout the year.

Based on the provided information, please prepare a comprehensive report addressing the following points:

a) Calculate the following financial ratios for ABC Company:
- Gross Profit Margin
- Operating Profit Margin
- Net Profit Margin
- Return on Assets (ROA)
- Return on Equity (ROE)
- Current Ratio
- Debt-to-Equity Ratio
- Earnings per Share (EPS)

b) Analyze the company's financial performance and comment on its profitability, liquidity, and solvency.

c) Discuss any limitations or weaknesses you identify in the financial statements provided.

d) Provide recommendations for improving the company's financial position or performance, if applicable