Comparative Income Statements and Balance Sheets for Metro Track Company

Essay

Comparative income statements and balance sheets for Metro Track Company follow for 2017 and 2016.
Required:
a. Prepare a comprehensive analysis of Metro Track for 2017 including the following measures (round all calculations to three decimal places.
1. Short-term solvency ratios (current ratio, acid test, inventory turnover, and days sales in receivables ratios)
2. Long-term solvency ratios (debt-to-equity and times-interest-earned ratios)
3. Performance measurement ratios (asset turnover, return on sales, return on assets, and return on equity ratios)
b. Comment on the financial condition of Metro Track with respect to short-term solvency, long-term solvency, and performance.
c. Using the data for Metro Track Company, prepare common size statements. For the balance sheets, use total assets as the base; for the income statements, make one set using sales of each year as the base and another set using the year 2016 as the base for both years.
d. Comment on the condition of Metro Track drawing on the common size statements.