TUTORIAL: RATIO ANALYSIS Balance Sheet as at December 31, 2020

Required:

Snider Corporation

Assets

RM

Current assets: Cash Marketable securities Account receivable (net) Inventory Total current assets Investments Plant and equipment Less: Accumulated depreciation Net plant and equipment Total assets	50,000 20,000 160,000 200,000430,000 60,000 600,000 (190,000) 410,000 900,000
Liabilities and Stockholders equity: Current liabilities: Accounts payable Note payable Accrued taxes Total current liabilities Long term liabilities: Bonds payable Total liabilities Stockholders equity: Preferred stock, $50 par value Common stock, $1 par value Capital paid in excess of par Retained earnings Total stockholders equity Total liabilities and stockholders equity	90,000 70,000 10,000 170,000 150,000 320,000 100,000 80,000 190,000 210,000 580,000 900,000

Snider Corporation Income Statement for the Year Ending December 31, 2020

a) From the financial statement, evaluate whether how Snider Corporation has effectively managed its assets.

RM

Sales (on credit) Less: Cost of goods sold Gross profit Less: Selling and administrative expenses Operating profit (EBIT) Less: Interest expenses Earnings before taxes (EBT) Less: Taxes Earnings after taxes (EAT) *includes RM35,000 in lease payments.

1,980,000 1,280,000 700,000475,000 225,000 25,000200,000 80,000 120,000

b) Based on the above analysis, what advice would you recommend in the context of Snider Corporations profitability, liquidity and debt ratios. Support your answer with data on the relevant ratios.