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(4) Make a financial statement analysis using the following financial ratios: Ratios 2006: Current Ratio 3.95x, Acid Test Ratio 1.

(4) Make a financial statement analysis using the following financial ratios:
Ratios 2006: Current Ratio 3.95x, Acid Test Ratio 1.8x, Return on Sales 5%,
Return on Total Assets 46%, Return on Equity 21%, Debt Ratio .30x.
Ratios 2007: Current Ratio 4.11x, Acid Test Ratio 1.95x, Return on Sales 5%, Return on Total Assets 48%, Return on Equity 28%, Debt Ratio .26x.

And write a report about the results obtained by the company in terms of liquidity or solvency, profitability (return on total assets), management efficiency, and the comparison of the ratios of the previous years.

Note:
1. Use accrual-basis accounting system.
2. Use an eight-column worksheet to produce your financial statement
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Accounting-8085617.doc

Liquidity
Liquidity ratios are those ratios that help in identifying how well the company is placed
with respecting to honouring immediate payments or uncertain expenses. The company
should always...

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