I need help.

Please use Excel for question #3, you can answer the first two in Excel as well, just use a new tab.

1.What is and describe the "five question approach" to using financial ratios.

2. What is liquidity, and what is the rationale for its measurement?

3. The financial statements and industry norms are shown below for Pamplin, Inc.:

• a. Compute the financial ratios for Pamplin for 2016 and 2017 and compare against the industry norms (better/worse).
• b. How liquid is the firm?
• c. Are its managers generating an adequate operating profit on the firm's assets?
• d. How is the firm financing its assets?
• e. Are its managers generating a good return on equity?

Choose 7 from here to compare Norms Current Ratio 5.00 Acid Test (quick) ratio 3.00 Inventory Turnover 2.20 Average collection period 90.00 Debt Ratio 0.33 Times Interest earned 7.00 Fixed-asset turnover 1.00 Operating profit margin 20% Return on common equity 9%I Pamplin |nc., Balance Sheet Assets 2016 2017 Cash 5 200 5 150 Accounts Receivable 450 450 Inventory E @ Current Assets $1,200 $1,200 Plant 8: Equipment $2,200 $2,600 Less accumulated depreciation (1,0001 11,200| Net plant 8: equipment $1,200 $1,400 Total Total Assets $2,400 $2,600 Accounts payable 5 200 S 150 Notes payable {9%) Q @ Current Liabilities S 250 S 350 Bonds (8.33% interest) Q Q Total debt 5 850 S 950 Owners' equity common stock 5300 $300 Paid-in capital 600 600 Retained earnings @ E Total owners' equity $1,600 $1,700 Total liabilities and owners' equity $2,400 $2,600 Income Statement 2014 2015 Sales\" $1,100 $1,450 Cost of goods sold E @ Gross profit S_ 500 600 Operating (expenses) (30) (40) Depreciation m E E E Operating prots 5 250 5 360 Interest expense ($1 ($1 Net income before taxes 5 200 S 296 Taxes [40%) 8_0 Net income 5 1 0 5 178 *15% of sales are cash sales, with the remaining 85% being credit sales