Exhibit 10 The Zeco Company's Industry Averages Are as Follows:
Net Profit

question 19

Multiple Choice

Exhibit 10.8
Use the Information Below for the Following Problem(S)
Zeco Company has the following financial statements for year ending 12/31/2008.
$\begin{array}{c}\begin{array}{lll}Sales\\\text{Cost of Goods Sold}\\\text{Gross Profit}\\\text{Depreciation}\\\text{Operating Expenses}\\\text{Administration Exp.}\\\text{Operating Profit 15,000}\\\text{Interest Expense}\\\\\text{Profit Before Taxes}\\Taxes\\\\\text{Net Income}\\Dividends\\\end{array}\begin{array}{lll}&&&\end{array}\begin{array}{lll}1,000,000\\750,000 \\\hline 250,000 \\100,000 \\70,000 \\65,000\\\\\\8,000\\\hline7,000\\\\2,800\\\hline4,200\\3,200\end{array}\end{array}$
$\begin{array}{c}\begin{array}{lll}\text{Assets}\\\text{Cash}\\\text{Accounts Receivable}\\\text{Inventory}\\\text{Total Current Assets}\\\text{Net Fixed Assets}\\\text{Total Assets}\\\\\\\end{array}\begin{array}{lll}\\50,000 \\250,000 \\325,000 \\\hline 825,000 \\450,000 \\\hline 1,275,000\\\\\\\end{array}\begin{array}{lll}\text{Liabilities}\\\text{Notes Payable}\\\text{Accounts Payable}\\\text{Total Current Liab.}\\\text{Long Term Debt}\\\text{Common Stock}\\\text{Retained Earnings}\\\text{Total Liab. \& Earnings}\\\\\end{array}\begin{array}{lll}250,000 \\350,000 \\\hline 800,000 \\225,000 \\200,000 \\50,000 \\\hline 1,275,000\end{array}\end{array}$
The Zeco Company's industry averages are as follows:
Net Profit Margin = 4.5%; Total Asset Turnover = 0.8; Total Assets/Equity = 1.5
-Refer to Exhibit 10.8.Based on this information what are the strengths and concerns of Zeco Company?

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Definitions:

Secret Price Cuts

Price reductions on goods or services that are not publicly advertised or disclosed to all customers.

Less Attractive

This describes a decrease in appeal or desirability of an object, person, or concept compared to another.

Stable Demand

A market condition where the desire for a product or service remains consistent over a period of time.

Quality Competition

A market scenario where companies compete based on the quality of their offerings rather than on price alone, aiming to attract discerning customers.