Question 2: (Total 9 marks) The following are the comparative financial statements for Eagle Company Cash Accounts receivable (net) Other current assets Investments Plant and equipment (net) Eagle Company Balance Sheet December 31 2017 $ 30,000 50,000 90,000 55,000 500,000 $725,000 2016 $ 20,000 45,000 95,000 70,000 370,000 $600,000 2015 18,000 48,000 64,000 45,000 358,000 $533,000 Current liabilities Long-term debt Common stock, $10 par Retained earnings $ 85,000 145,000 320,000 175,000 $725,000 $ 80,000 85,000 310,000 125,000 $600,000 $ 70,000 50,000 300,000 113,000 $533,000 Eagle Company Income Statements For the Years Ended December 31 2017 Sales revenue $740,000 Less: Sales returns and allowances 40,000 Net sales 700,000 Cost of goods sold 425,000 Gross profit 275,000 Operating expenses (including income taxes) 180,000 Net income $ 95,000 2016 $600,000 30,000 570,000 350,000 220,000 150,000 $ 70,000 Further information: Hint: you must compute dividends paid. The market price of Eagle's common stock was as follows: Year Market price 2015 $7.00 2016 $7.50 2017 $8.50 3 Required a. Determine the following financial ratios for 2016 and 2017. 1. Profit margin. (1 mark) 2. Asset turnover. (1 mark) 3. Earnings per share. (1 mark) 4. Price-earnings ratio. (1 mark) 5. Payout ratio. (1 mark) 6. Debt to assets ratio. (1 mark) b. After determining the above financial ratios, explain briefly whether or not the company experiences improvement in the financial position and operating for the period from 2016 to 2017