Fabrics Ltd. e Income Statements 2016 $ 2016% 2017 $ 2017% 2018 5 2018% Sales COGS Gross margin Operating expenses Operating income Interest expense Income before taxes Income taxes (40%) Net income 599 100 291000 308"100 106'200 201'900 11'200 190700 76280 114'420 538 900 259200 279700 104600 175 100 10'500 164600 65840 98760 508100 234300 273800 104 100 169700 11900 157800 63'120 94680 Fabrics Ltd. tive Balance Sheets 2016 $ 2016% 2017 $ 2017% 2018$ 2018% Assets Cash AIR (net) Inventory Prepaid expenses Total current assets Capital assets (net) Total assets 32'000 126860 60000 11000 229-860 668900 898760 25800 127000 80700 10000 243500 576'000 819 500 20500 94300 55000 4800 175400 540300 715700 Liabilities & Shareholders' Equity Accounts payable Accrued expenses Total current liabilities Long-term debt Total liabilities 53120 11000 64'120 170000 234120 81200 12240 93440 160000 253440 79 100 41700 120800 150000 2707800 Common stock ($0.50 par value) Additional paid in capital Retained earnings Total equity Total liabilities & equity 6000 99 000 559'640 664540 898760 6000 99 000 461060 566060 819500 5000 62000 377900 444900 715700 Closing Stock Price $ 38.00 $ 35,00 $ 30.00 Required: 1. Prepare a horizontal analysis for all 3 years. Use %, not dollars. What significant changes do you see? 2. Prepare common-size financial statements for all 3 years. What significant changes do you see? 3. Assess Patel's liquidity by using liquidity ratios. Is the company's position Improving or deteriorating? Explain your answer. 4. Assess Pippin's profitability by using profitability ratios. For ratios that require average balances calculate them for 2017 & 2018 only. Assess's Patel's profitability using these ratios 5. How does the stock market View Pippin's performance over thses three years? Explain the basis for your answer 6. After you have completed the above analysis, identify what you consider to be the three most significant weaknesses in Patel's performance In order to pass this assignment, you must complete all parts of the assignment