Problem 2 - Long Problem (40 points)- Ratio Analysis

The president of FeelHelp, Inc. Has been concerned about its operating performance and financialstrenght. She has obtained from of DTI the average of certain ratios for the industry. She gives you these ratios and the companies comparative financial statements for years 2021 and2020.

BALANCE SHEET - Two years ending December 31

2021 2020

Assets:

Cash	14,000	10,000
Accounts Receivable	21,000	15,000
Inventories	50,000	43,000
Prepaid Expenses	2,000	6,000
Property and Equipment	190,000	140,000
Accumulated Depreciation	( 65,000)	(54,000)
Longterminvestments	70,000	90,000
Total Assets	P282,000 ========	P250,000 ========
Liabilities and Stockholders' Equity:
Accounts Payable	P 26,000	P 25,000
Accrued Liabilities	10,000	12,000
Dividends Payable	13,000	18,000
Income tax Payable	36,000	31,000
Bonds Payable	50,000	40,000
Common Stock, P10 par	80,000	70,000
RetainedEarnings	67,000	54,000
Total Liabilities and Stockholders' Equity	P 282,000 =========	P250,000 =========

INCOME STATEMENT -For the fiscal year ended December 31, 2021

Sales	P 230,000
Cost of sales	120,000
Operating expenses	70,000
Interest expenses	5,000
Income taxes	10,000

Additional Information:

1. Common stock is now selling at P25 pershare
2. 60% of sales were onaccount

The Average Ratios of the Industry are as follows:

Quick Ratio	0.50	Times Interest earned	8 times
Debt Ratio	45.5%	Basic Earning Power	0.15
Inventory turnover	3.0 times	Operating Profit Margin	20%
Market-Book Ratio	1.5	Inventory Conversion Period	120 days
Price-Earnings Ratio	9 times	Accounts Receivable Turnover	5.5 times

Required:

1. Compute the ratios shown above for FeelHelp Corp. (show computation and a short explanation of your answer. Then compare your answer with the industry ratios and comment which isbetter.
2. Using the Dupont formula, compute for the company's ROA andROE.
3. Comment briefly on the performance of the company in terms of its liquidity, asset management, debt management, profitability and market value ratios as compared to the industry.