PART 3: Case study: ABC Farm Supply StoreUse the following condensed financial statements (Table… 1 answer below »

PART 3: Case study: ABC Farm Supply StoreUse the following condensed financial statements (Table 10.5 and Table 10.6) from the ABC Farm Supply Store, calculate and interpret at least one profitability, liquidity, and solvency ratio.Table 10.5 ABC Farm Supply Store condensed balance sheetAssets Current Assets Cash $ 171,000 Accounts receivable 698,000 Inventory 897,000 Total current assets $1,766,000 Total fixed assets 2,482,000 Total assets $4,248,000Liabilities and Owner’s Equity Current Liabilities Accounts payable $483,000 Notes payable 565,000 Total current liabilities $1,048,000 Long-term liabilities 2,000,000 Total liabilities $3,048,000 Owner’s contribution $1,000,000 Retained earnings 200,000 Total Owner’s Equity Total liabilities and owner’s equity $1,200,000 $4,248,000 Table 10.6 ABC Farm Supply Store condensed income statementNet Sales $5,215,000 Cost of goods sold 3,285,450 Gross margin $1,929,550 Operating expenses 1,202,423 Administrative expenses 320,646 Other expenses 80,161 Total operating expenses $1,603,230 Net operating income $326,320 Interest expense 152,400 Net income before taxes $173,920 Income tax 42,480 Net income after taxes $131,440