Problems 1 and 2 BALANCE SHEET 2015 INSTRUCTIONS: Analyze the firm\'s performanc

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Problems 1 and 2 BALANCE SHEET 2015 INSTRUCTIONS: Analyze the firm's performance from both time-series and cross-sectional points of view using the key financial ratios provided.

PROVIDE YOUR WRITTEN ANALYSIS IN THIS COLUMN. Assets     Cash and Equivalents $237,500.00 Accounts Receivable $592,500.00 Inventory $607,500.00 Total Current Assets $1,437,500.00 Gross Fixed Assets $1,250,000.00 Less Accumulated Depreciation $187,500.00 Net Fixed Assets $1,062,000.00 Total Assets $2,500,000.00 Liabilities and Equity Current Liabilities Accounts Payable $222,500.00 Notes Payable $422,500.00 Accruals $217,500.00 Total Current Liabilities $862,500.00 Long Term Debt $470,000.00 Total Liabilities $1,332,500.00 Stockholder's Equity Common Stock $637,500.00 Retained Earnings $530,000.00 Total Stockholders Equity $1,167,500.00 Total Liabilities & Equity $2,500,000.00 INCOME STATEMENT Sales Revenue $3,360,000.00 Cost of Sales $2,724,960.00 Gross Profits $635,040.00 Less: Operating Expenses Selling Expense $251,200.00 General S&A $163,200.00 Depreciation $48,000.00 Total Operating Expenses $462,400.00 Total Operating Profit $172,640.00 Less: Interest Expense $31,200.00 Net Profits Before Taxes $141,440.00 Less Taxes (40%) $56,576.00 Net Profits After Taxes $84,864.00 LIQUIDITY RATIOS 2013 2014 2015 Industry Average Current Ratio 1.5 1.7 ? 1.6 Quick Ratio 0.9 1 ? 0.9 Operating Cash Flow n/a n/a ASSET MANAGEMENT RATIOS 2013 2014 2015 Industry Average Inventory Turnover 6 5 ? 8.4 Average Collection Period 40 50 ? 40 Fixed Asset Turnover n/a n/a Total Asset Turnover 1.5 1.5 ? 1.75 DEBT MANAGEMENT RATIOS 2013 2014 2015 Industry Average Debt Ratio 60% 56% 50% Times Interest Earned 2.5 3.5 4 PROFITABILITY RATIOS 2013 2014 2015 Industry Average Gross Profit Margin 20% 19.70% ? 20% Operating Profit Margin 4.70% 4.80% ? 6% Net Profit Margin 2% 2.30% ? 3% Return on Investment 3.00% 3.50% ? 5.25% Return on Equity 7.50% 7.95% ? 10.50% End of worksheet Problems 1 and 2 BALANCE SHEET 2015 INSTRUCTIONS: Analyze the firm's performance from both time-series and cross-sectional points of view using the key financial ratios provided.

PROVIDE YOUR WRITTEN ANALYSIS IN THIS COLUMN. Assets     Cash and Equivalents $237,500.00 Accounts Receivable $592,500.00 Inventory $607,500.00 Total Current Assets $1,437,500.00 Gross Fixed Assets $1,250,000.00 Less Accumulated Depreciation $187,500.00 Net Fixed Assets $1,062,000.00 Total Assets $2,500,000.00 Liabilities and Equity Current Liabilities Accounts Payable $222,500.00 Notes Payable $422,500.00 Accruals $217,500.00 Total Current Liabilities $862,500.00 Long Term Debt $470,000.00 Total Liabilities $1,332,500.00 Stockholder's Equity Common Stock $637,500.00 Retained Earnings $530,000.00 Total Stockholders Equity $1,167,500.00 Total Liabilities & Equity $2,500,000.00 INCOME STATEMENT Sales Revenue $3,360,000.00 Cost of Sales $2,724,960.00 Gross Profits $635,040.00 Less: Operating Expenses Selling Expense $251,200.00 General S&A $163,200.00 Depreciation $48,000.00 Total Operating Expenses $462,400.00 Total Operating Profit $172,640.00 Less: Interest Expense $31,200.00 Net Profits Before Taxes $141,440.00 Less Taxes (40%) $56,576.00 Net Profits After Taxes $84,864.00 LIQUIDITY RATIOS 2013 2014 2015 Industry Average Current Ratio 1.5 1.7 ? 1.6 Quick Ratio 0.9 1 ? 0.9 Operating Cash Flow n/a n/a ASSET MANAGEMENT RATIOS 2013 2014 2015 Industry Average Inventory Turnover 6 5 ? 8.4 Average Collection Period 40 50 ? 40 Fixed Asset Turnover n/a n/a Total Asset Turnover 1.5 1.5 ? 1.75 DEBT MANAGEMENT RATIOS 2013 2014 2015 Industry Average Debt Ratio 60% 56% 50% Times Interest Earned 2.5 3.5 4 PROFITABILITY RATIOS 2013 2014 2015 Industry Average Gross Profit Margin 20% 19.70% ? 20% Operating Profit Margin 4.70% 4.80% ? 6% Net Profit Margin 2% 2.30% ? 3% Return on Investment 3.00% 3.50% ? 5.25% Return on Equity 7.50% 7.95% ? 10.50% End of worksheet

Explanation / Answer

5.13

2.5

Particulars 2015 Current ratio 1.67 Quick ratio 0.96 Inventory turnover 5.53 Average collection period 64.3 Total assets turnover 1.34 Debt ratio 53.3 Times interest earned 5.5 Gross margin percentage 18.9 Operating profit margin

5.13

Net profit margin

2.5

Return on investment 3.39 Return on equity 7.57

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