Quest+1:25ion 8 Score 0 The Income and Balance Statements for the XYZ company is

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Quest+1:25ion 8 Score 0 The Income and Balance Statements for the XYZ company is shown below for 2011 and 2012. What conclusions for a potential investor can be drawn from these? Explain how you arrived at your conclusions. Record your answer below the financial statements. XYZ Corporation Income Statement 2011 2012 Revenue $15,000,000 $15,250,000 Returns, Credits, etc. ($5,000) ($4,500) Net Sales (Revenue) $14,995,000 $15,245,500 Direct Costs Labor ($4,000,000) ($4,250,000) Materials ($2,500,000) ($2,250,000) Cost of Goods Sold (COGS) ($6,500,000) ($6,500,000) Gross Margin $8,495,000 $8,745,500 Selling General and Admin. Marketing ($1,250,000) ($1,100,000) Research and Development ($1,000,000) ($750,000) Administration ($750,000) ($700,000) Other ($500,000) ($500,000) Depreciation ($250,000) ($250,000) S G & A ($3,750,000) ($3,300,000) Earnings Before Interest and Taxes (EBIT) $4,745,000 $5,445,500 Interest Expense/Income ($117,300) ($103,800) Pre-tax Income $4,627,700 $5,341,700 Income Tax @ 30% ($1,388,310) ($1,602,510) Net Income $3,239,390 $3,739,190 Balance Sheets 2011 2012 Assets Current Assets Cash $300,000 $600,000 Accounts receivable $120,000 $120,000 Finished Goods Inventory $20,000 $15,000 Materials Inventory $40,000 $30,000 Total Current Assets $480,000 $765,000 Long term Assets Buildings $10,000,000 $10,000,000 Equipment and machines $2,960,000 $2,960,000 Other $500,000 $500,000 Total Fixed Assets $13,460,000 $13,460,000 Total Assets $13,940,000 $14,225,000 Liabilities Current Liabilities Notes Payable $100,000 $100,000 Accounts Payable $125,000 $150,000 Taxes Payable $10,000 $10,000 Total Current Liabilities $235,000 $260,000 Long Term Liabilities Bank Loans @ 6% $455,000 $455,000 Mortgage @ 4.5% $2,000,000 $1,700,000 Total Long Term Liabilities $2,455,000 $2,155,000 Capital Stock $9,900,000 $9,900,000 Retained Earnings $1,350,000 $1,910,000 Stockholders Equity $11,250,000 $11,810,000 Total Liabilities and Stockholders equity $13,940,000 $14,225,000 Current Stock Price $14.00 $13.75 Current Outstanding Shares 1,000,000 1,000,000

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