Financial Ratios (15 marks)

Required:

1. Using the information provided below, calculate the following ratios:

• Acid-test ratio
• Current ratio
• Gross profit ratio
• Net profit ratio
• Debt ratio
• Equity ratio
• Earnings per share ratio

1. Briefly discuss the liquidity and profitability of the company in 2024 in comparison to 2023 using the ratios calculated in the analysis.

Anetek Corporation Income Statement Anetek Corporation Balance Sheet December 31, 2024 2024 Assets Current Assets \begin{tabular}{lrr} Cash & 40,000 & 25,000 \\ Short-term note receivable & 100,000 & 75,000 \\ Accounts Receivable & 350,000 & 300,000 \\ Inventory & 390,000 & 250,000 \\ \hline Total Current Assets & 880,000 & 650,000 \end{tabular} Fixed Assets Property, plant, and equipment \begin{tabular}{rr} 1,100,000 & 1,100,000 \\ \hline 1,980,000 & 1,750,000 \\ \hline \hline \end{tabular} Liabilities Current Liabilities Accounts Payable Notes Payable Total Current Liabilities \begin{tabular}{rr} 205,000 & 100,000 \\ 250,000 & 200,000 \\ \hline 455,000 & 300,000 \end{tabular} Long-term debt \begin{tabular}{rr} 725,000 & 782,500 \\ \hline \end{tabular} Total Liabilities 1,180,0001,082,500 ShareholdersEquity Common Shares: 100,000 shares authorized, 1,500 shares issued and outstanding. Contributed Surplus Retained Earnings Total Shareholders' Equity \begin{tabular}{rr} 150,000 & 150,000 \\ 400,000 & 350,000 \\ 250,000 & 167,500 \\ \hline 800,000 & 667,500 \end{tabular} Total Liabilities and Equity \begin{tabular}{rr} 1,980,0001,750,000 \\ \hline \hline \end{tabular} Anetek Corporation Income Statement Anetek Corporation Balance Sheet December 31, 2024 2024 Assets Current Assets \begin{tabular}{lrr} Cash & 40,000 & 25,000 \\ Short-term note receivable & 100,000 & 75,000 \\ Accounts Receivable & 350,000 & 300,000 \\ Inventory & 390,000 & 250,000 \\ \hline Total Current Assets & 880,000 & 650,000 \end{tabular} Fixed Assets Property, plant, and equipment \begin{tabular}{rr} 1,100,000 & 1,100,000 \\ \hline 1,980,000 & 1,750,000 \\ \hline \hline \end{tabular} Liabilities Current Liabilities Accounts Payable Notes Payable Total Current Liabilities \begin{tabular}{rr} 205,000 & 100,000 \\ 250,000 & 200,000 \\ \hline 455,000 & 300,000 \end{tabular} Long-term debt \begin{tabular}{rr} 725,000 & 782,500 \\ \hline \end{tabular} Total Liabilities 1,180,0001,082,500 ShareholdersEquity Common Shares: 100,000 shares authorized, 1,500 shares issued and outstanding. Contributed Surplus Retained Earnings Total Shareholders' Equity \begin{tabular}{rr} 150,000 & 150,000 \\ 400,000 & 350,000 \\ 250,000 & 167,500 \\ \hline 800,000 & 667,500 \end{tabular} Total Liabilities and Equity \begin{tabular}{rr} 1,980,0001,750,000 \\ \hline \hline \end{tabular}