Chris Guthrie was recently hired by S&S Air, Inc., to assist the company with its financial planning, and to evaluate the company's performance. Chris graduated from college five years ago with a finance degree. He has been employed in the finance department of a Fortune 500 company since then.

S&S Air was founded 10 years ago by friends Mark Sexton and Todd Story. The company has manufactured and sold light airplanes over this period, and the company's products have received high reviews for safety and reliability. The company has a niche market in that it sells primarily to individuals who own and fly their own airplanes. The company has two models, the Birdie, which sells for $53,000, and the Eagle, which sells for $78,000.

While the company manufactures aircraft, its operations are different from commercial aircraft companies. S&S Air builds aircraft to order. By using prefabricated parts, the company is able to complete the manufacture of an airplane in only five weeks. The company also receives a deposit on each order, as well as another partial payment before the order is complete. In contrast, a commercial airplane may take one and one-half to two years to manufacture once the order is placed.

Mark and Todd have provided the following financial statements. Chris has gathered the industry ratios for the light airplane manufacturing industry.

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S&S Air, Inc. 2014 Income Statement Sales Cost of goods sold Other expenses EBIT Interest Taxable income Taxes (40%) Net income S24,092,400 17,982,000 2,878,800 786,000 S 2,445,600 434,400 S 2,011,200 804,480 S 1,206,720 S246,000 Dividends Add. to retained eamings S960,720 S&S Air, Inc. 2014 Balance Sheet Assets Liabilities & Equity Current assets Current liabilities $ 438,048 1,841,616 1.486.200 Total current assets 3,765,864 $ 858,816 1,735,680 Total current liabilities $ 2,594,496 Cash Accounts receivable Accounts payable Notes payable Long-term debt Shareholder equity Fixed assets $4,590,000 Net plant and equipment $14,778,816 $ 180,000 $11,180,184 $11,360,184 $18,544,680 Common stock Retained earmings Total equity Total assets $18,544,680 Total liabilities & equity Light Airplane Industry Ratios Lower Quartile ian Upper Quartile Current ratio Quick ratio Cash ratio Total asset turnover Inventory turnover Receivables turnover Total debt ratio Debt-equity ratio Equity multiplier Times interest earned Cash coverage ratio Profit margin Return on assets Return on equity 0.50 0.64 0.08 0.68 4.89 6.27 0.31 0.58 1.58 5.18 5.84 4.05% 6.05% 9.93% 1.89 1.05 0.39 1.28 10.89 11.51 0.61 1.56 2.56 9.83 10.27 0.84 0.21 0.85 9.82 0.52 1.08 2.08 8.06 8.43 515% 6.47% 10.53% 16.54% 13.21% 26.15%