Part 1 – Financial AnalysisThe condensed financial statements of Aries Company for the years 20X5 and20X6 are presented below.Aries CompanyBalance SheetDecember 3120X6 20X5Current AssetsCash and Equivalents £60 £160Accounts Receivable (net) 720 640Inventory 1080 800Prepaid Expenses 60 80Total Current Assets 1920 1680Property, Plant and Equipment 1520 1400Investments 20 20Intangibles and Other Assets 770 640Total Assets 4230 3740Current Liabilities 520 420Long-Term Liabilities 1720 1440Stockholders’ Equity--common 1990 1880Total Liabilities and Stockholders’ Equity 4230 3740Aries CompanyIncome StatementsFor the Years Ended December 3120X6 20X5Sales Revenue £6,000 £5,740Cost and ExpensesCost of Goods Sold 4920 4720Selling and Administrative Expenses 560 500Interest Expense 160 140Total Costs and Expenses 5,640 5,360Income Before Income Tax 360 380Income Tax Expense 140 150Net Income £ 220 £ 230Compute the following ratios for 20X6 and 20X5.(a) Current ratio.(b) Inventory turnover. (Inventory on 12/31/X4 was £652.)(c) Profit margin ratio.(d) Return on assets. (Assets on 12/31/X4 were £3,480.)(e) Return on common stockholders' equity. (Stockholders' equity on 12/31/X4 was£1760.)(f) Debt to total assets ratio.(g) Times interest earned.Critically evaluate your ratio calculations and conclude on the current state ofthe company.Word count 500 (+/- 10%)

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