Comprehensive Financial Statement Analysis (LO4, 5, 6)

You are part of the acquisitions committee of Witter Company and are asked to examine the potential acquisition of Dryds, Inc., a merchandising firm. Selected financial statement data from the past two years follow.

DRYDS, INC.

Comparative Balance Sheets December 31, 2012 and 2011

: : 2012 2011 Cashier tren acticin tara aceasta bbe eG: $ 130,000 $ 120,000 PAC COUMISINECCaIllVa © pester nasa i merce shi aigs tie eit eer oe 430,000 370,000 TVG MEO IN ampere rite ecco neti citEe sts mac a eca sta, cadea nd Geers 400,000 400,000 AKojoelany, [Es elatel GlelUlfolnielNicccudgchaoo dneeoP.@ eenoss cbo e 900,000 800,000 Fessaccumulatedicepreciatiomenir cscs leis) .cieis ete nei 325,000 250,000 MOtalkASSOtS ar meee te ce cieusrcy Seen ex ois Ge one che oe ete $1,535,000 $1,440,000 INSCOU ANS (SENE10)G ras 2,a rc tree nee ee cece es ats $ 300,000 $ 260,000 Hong=tentnmoteipayabletncs a paeeos cree ae unre ee emie 280,000 280,000 GONnIMOmestOCK Mensa ore re. 8 mrnenee ever ug oc Soseg see ap eR 690,000 690,000 RetainedreatningGseerater oor cmeore ns. cke eee oes 265,000 210,000 fhotaliltabilitiosranCiequitViamer:. secteye ayocoe cesta oie eee nriere $1,535,000 $1,440,000 DRYDS, INC.

Income Statement For Year Ended December 31, 2012 Sd OS mee ate nea ae grea oud dar and & 24 #4 aucun as Se oe $2,943,000 WOSWOTOOOUSISOICa rna ercerce-cindauce Geiv-ekiw 0 can vie ye Oe Oe ee 2,200,000 WIEISIES COSI oi din ad pteck Rae een ENE SE 350,000 SUD PUCSIOX DONS Crm tanea ait ects.( aigii ainw ine <)1 m,We sinic oc a ae ene ee a 100,000 NNERESOXDONSC ne tere tha AGA Rade S.6 Sa atl aOR See ee 22,400 HOSSIONESAIOIOLIIXOC ASSOLS 0:4 5.2 6 Gat hed fb dud 6 nce S se ee ee ee 75,000 INGUIMEOMISIDCTOFOTAXOSI on sync avec cov e.sue-dex Gre sie © SRR Ac ORI ae 153,000 IeC.N T OMLAX OS Mere vtayae Mae cur cae sMezeh cts lac: bayv as lecer vest Aue rea sae 52,020 INGTUNCOMIG aerare ear tetas cdi: Gutdclacs iru sa ege die og AAD co ayes Ne $ 100,980 Required

a. Compute the following ratios for 2012. (Round calculations to three decimal places.)
b.
Cc.
1. Current ratio Acid test Inventory turnover Days receivables outstanding Debt-to-equity ratio Times-interest-earned Asset turnover Return on sales 9. Return on assets SIDAAKAKRWN 10. Return on equity Appendix A | Managerial Analysis of Financial Statements Prepare common size statements for each of the statements.
What is your recommendation regarding the acquisition of Dryds?

Financial Statement Analysis with Actual Annual Report Select a recent annual report or 10-K filing (or use one provided by your instructor) of a publicly held company and perform all of the financial analysis measures discussed in this appendix. Include vertical and horizontal analyses with common size statements. List any of the measures discussed in this appendix that you were unable to perform and state the reasons. Give your evaluation of the company’s financial performance and trend, citing financial analysis measures to support your interpretation. If