(1) Comment on whether you believe the company's financial position has improved from Year 1 to Year 2 or become worse.
(2) Provide evidence from your analyses in A-C to support your position.
PART A. COMMON SIZE Balance Sheet Year 1 Year 2 Year 1 Year 2 Assets Cash $266.000 $198 821 71.93% 56.81% Accounts Receivable $18.800 520.682 5.08%% 6.9576 [met] Inventory $20.000 $25.080 5.41% 8.43% PP&E (net) 565.000 353.000 17.586 17.81% Total Assets $369.800 $207.583 100.00% 100.00% Liabilities and Stockholders Equity Liabilities Accounts Payable $2.400 $3.121 0.65% 1.05% Dividend Payable 59.000 SO 2.43% 0.00% Note Payable $70.000 SO 18.93% 0.00% Bonds Payable $100.000 $100.000 27.04% 33.60%% Total Liabilities $181.400 $103 1201 Stockholders Equity Common Stock at Par $50.000 $50.000 13.52% 16.80 APIC $150.000 $150.000 40.56% 50.41% Treasury Stock ($22,000) ($20,000) -5.959% -6.72%% Retained Earnings $10.400 $14.463 2.81% 4.8676 Total Stockholders" $188.400 $104 463 Equity Total Liabilities and $369.800 $207.583 100.004% 100.004% Stockholders Equity Income Statement Year 1 Year 2 Revenues $140.000 $159.600 100.00% 100.00% Cost of Goods Sold $60.000 $75.000 42.86% 46.997% Gross Margin $80,000 $84,600 57.14% 5301% Expenses Depreciation $12.000 $12.000 8.57% 752% Building Lease $36.000 $37.800 25.71% 23.68%% Bad Debt 51.200 $1.596 0.86% 1.00% Interest $11.400 527.400 8.149% 17.17% Total Expenses $60,600 $78,796 43.209% 49.37%% Income before taxes $19,400 $5.804 13.86% 3.64% Income tax expense $5,820 $1,741 4.16% 1.09% Net Income $13.580 9.70%% 137%Balance Sheet Year 1 Year 2 Assets Percent Change Cash $266,000 $198,821 -25.2696 Accounts Receivable (net) $18,800 $20,682 10.01 4% Inventory $20,000 $25,080 25.4096 PPIE ( net) $65.000 $53.000 -18.4696 Total Assets $360 800 $207 583 -19.5396 Liabilities and Stockholders' Equity Liabilities Accounts Payable $2,400 $3,121 30.0396 Dividend Payable $9,000 -100.009% Note Payable $70,000 -100.009% Bonds Payable $100.000 $100.000 0.009% Total Liabilities $181 400 $103 121 -43.1590 Stockholders Equity Common Stock at Par $50,000 $50,000 0.009% APIC $150,000 $150,000 0.009% Treasury Stock ($22,000) ($20,000) -910946 Retained Earnings $10,400 $14,463 39.0796 Total Stockholders' Equity $188 400 $194 463 3.229% Total Liabilities and $360 800 $297 583 Stockholders' Equity -19.5390 Income Statement Year 1 Year 2 Revenues $140,000 $159,600 14.009% Cost of Goods Sold $60,000 $75,000 25.0096 Gross Margin $80,000 $84,600 5.759% Expenses Depreciation $12,000 $12,000 0.009% Building Lease $36,000 $37,800 5.009% Bad Debt $1,200 $1,596 33.009% Interest $11,400 $27,400 140.359% Total Expenses $60,600 $78,796 30.0396 Income before taxes $19,400 $5,804 -70.0896 Income tax expense $5,820 $1,741 -70.0896 Net Income $13.580 -70.0896RATIO ANALYSIS Profitability Balance Sheet Year 1 Year 2 Asset: Year 1 Year 2 Cash $266,000 $198,821 ROE 7.21% 21099% Accounts Receivable (net) $18,800 $20,682 ROA 3.67% 1 37%) Inventory $20,000 $25,080 9.70% 2.559% PP&E (net) $65.000 153.000 GROSS PM 57.14% 301% Total Assets $207 583 Asset Management Liabilities and Stockholders Equity Year 1 Year 2 A/K turnover 7.45 1.72 Liabilities A R. collection 19.0 47.30 Accounts Payable 12,400 $3,121 Inventory turnover 3.00 2.99 Dividend Payable 19,000 Inventor-on-hand 122 122 Note Payable $70,000 Asset turnover 0.38 0.54 Bonds Payable $100,000 $100,000 Total Liabilities $181 400 $103 121 Liquidity Year 1 Year 2 Stockholders' Equity Cash MS to Asset: 0.72 0.671 Common Stock at Par $50,000 $50,000 Quick ratio 24.95 70.341 APIC $150,000 $150,000 Current ratio 26.74 78.38 Treasury Stock $22,000 $20.000 AP Turnover 25.00 24.03 Retained Earnings $10.400 $14.463 Days payable 15 15 Total Stockholders' Equity $188 4001 $194 463 Solvency Total Liabilities and Stockholders Equity $207 543 Year 1 Year 2 Income Statement Year Year mancial leverage .96 .53 Revenues $140,000 $159,600 Long-term debt to Assest 45.97% 33.60% Cost of Goods Sold $60,000 $75,000 Long-term debt to Equity 90.23% 51.42% Gross Margin $80,000 $84,600 Interest Expense 2.70 1.21 Expenses Depreciation $12,000 $12,000 Building Lease $36,000 $37,800 Bad Debt $1,200 $1,596 Interest $11,400 $27,400 Total Expenses $60,600 $78, 796 Income before taxes $19,40 0 $5,804 Income tax expense $5,820 $1,741 Net Income $13 580 $4.063
