Baker & Co. has applied for a loan from the Trust Us Bank in order to invest

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Question:

Baker & Co. has applied for a loan from the Trust Us Bank in order to invest in several potential opportunities. In order to evaluate the firm as a potential debtor, the bank would like to compare Baker & Co. to the industry. The following are the financial statements given to Trust Us Bank:
Balance Sheet
Cash
Accounts receivable
Inventory
Current assets
Plant and equipment
Less: accdepr
Net plant and equipment
Total assets
Liabilities and Owners' Equity
Accounts payable 200 Notes payable 0 Current liabilities 200 Bonds 500 Owners' equity
Common stock 305 Paid-in-capital 775 Retained earnings 700 Total owners' equity 1,780 Total liabilities and owners' equity 2,480
12/31/2013 270 290 580 1,140 1,940 (600) 1,340 2,480

Income Statement
Sales (100% credit) Cost of goods sold Gross profit Operating expenses Depreciation
Net operating income Interest expense
Net income before taxes Taxes
Net income
Current ratio
Quick ratio
Inventory turnover Average collection period Debt ratio
Times interest earned Total asset turnover Fixed asset turnover Net profit margin Return on total assets Return on equity
1,330 760 570 30 200 340 57 283 96 187
Industry Norms 5.0
3.0
2.2
90 days .33
7.0
.75
1.0 12% 9.00% 10.43%
Required: Prepare a report to the Trust Us Bank about the firm performance.