The 2014 four-year comparative financial statements of Digital Shelf Space Corp. follow:
Required 1. Calculate the following for 2014 and 2013 and identify whether the ratios compare favorably (F) or unfavourably (U) from 2013 to 2014: (a) acid-test ratio, (b) Merchandise turnover, (c) Accounts payable turnover, (d) Debt ratio, (e) Ratio of pledged assets to secured liabilities, (f) Times interest earned, (g) Profit margin, (h) Return on total assets, and (i) Book value per common share. 2. Prepare a trend analysis for 2011 (the base year) through to 2014 using the income statement information. Analysis Component: Compare and explain the trend in cost of goods sold, operating expenses, and net income to the trend in net sales. Explain why retained earnings are constant over the fouryears.