Financial statement analysis (Learning Objective 2) 15–20 min.

Consider the following comparative income statement and additional balance sheet data for Fessler Fashions, Inc.

Fessler Fashions, Inc.

Income Statement Years Ended December 31, 2014 and 2013 Net Sales Cost of Goods Sold Gross Profit Selling and General Expenses Income From Operations Interest Expense Income Before Income Tax Income Tax Expense Net Income

$248,000 142,000 106,000 61,000 45,000 8,600 36,400 8,200

$ 28,200 2013

$236,000 134,000 102,000 63,500 38,500 9,300 29,200 6,600

$ 22,600 2014 Additional data follow:

Accounts receivable .....................................................

Inventory......................................................................

Total current assets .....................................................

Fixed assets .................................................................

Total Assets .................................................................

23,000 13,000 44,000 262,000

$306,000 2014 20,000 19,000 43,000 238,000

$281,000 2013 16,000 12,000 39,000 217,000

$256,000 2012 Requirements 1. For 2013 and 2014, compute the five ratios that measure how the business is investing its money and whether it is using its assets efficiently. Round each ratio to two decimal places. Assume all sales on credit.

2. Did the company’s performance improve or deteriorate during 2014?

AppendixLO1