1. Using your 2015/2016 Income Statement and Balance Sheet, add a column for percentage of total. Compute the percentages for each line item for the financial statements. For the 2015 Income Statement, what is the percentage of COGS as compared to total sales? Is this figure reasonable and what is COGS and why is it important to a company?

Pro-Forma Balance Sheet ICS MANUFACTURING COMPANY For 2015 to 2016 (all numbers in $) ASSETS 2015 2016 2015, percent 2016, percent Current Assets Cash 2,625,000 2,825,000 38% 35% Net accounts receivable 2,715,000 $3,122,250 40% 39% Inventory 1,514,000 $2,043,900 22% 26% Temporary investment $0 $0 Prepaid expenses $0 $0 Total Current Assets $6,854,000 $7,991,150 Fixed Assets Long-term investments $0 $0 Land $0 $0 Property,plant and equipment 12,745,000 14,745,000 66% 69% Goodwill 1,205,000 1,205,000 6% 6% Intangible Assets 5,275,000 5,275,000 27% 25% Total Net Fixed Assets $19,225,000 $21,225,000 TOTAL ASSETS $26,079,000 $29,216,150 LIABILITIES Current Liabilities Accounts payable 5,825,000 5,825,000 63% 63% Short-term notes $0 $0 Current portion of long-term notes $0 $0 Other Current Liabilities 3,365,000 3,365,000 37% 37% Total Current Liabilities $9,190,000 $9,190,000 Long-term Liabilities Long term debt 1,225,000 2,000,000 35% 37% Other long-term debt 2,230,000 $3,367,150 65% 63% Total Long-term Liabilities $3,455,000 $5,367,150 SHAREHOLDERS' EQUITY Common stock 6,425,000 6,425,000 48% 44% Retained earnings 7,009,000 $8,234,000 52% 56% Total Shareholders' Equity $13,434,000 $14,659,000 TOTAL LIABILITIES & EQUITY $26,079,000 $29,216,150

Pro-Forma Income Statement ICS MANUFACTURING COMPANY For 2015 Through 2016 REVENUE 2015 2016 2015, percent 2016, percent Gross sales $35,500,000 $37,346,000 100% 100% Less sales returns and allowances Net Sales $35,500,000 $37,346,000 COST OF SALES Beginning inventory Plus goods purchased / manufactured Total Goods Available Less ending inventory Total Cost of Goods Sold $12,725,000 $13,297,625 100% 100% Gross Profit (Loss) $22,775,000 $24,048,375 OPERATING EXPENSES Selling Salaries and wages Commissions Advertising Depreciation Other Total Selling Expenses $11,200,000 $11,625,600 76% 76% General/Administrative Salaries and wages Employee benefits Payroll taxes Insurance Rent Utilities Depreciation & amortization 3,200,000 3,255,000 90% 90% Office supplies Travel & entertainment Postage Equipment maintenance & rental Interest 350,000 375,000 10% 10% Furniture & equipment Total General/Administrative Expenses $3,550,000 $3,630,000 24% 24% Total Operating Expenses $14,750,000 $15,255,600 Net Income Before Taxes $8,025,000 $8,792,775 Taxes on income 3,210,000 3,517,110 40% 40% Net Income After Taxes $4,815,000 $5,275,665 Extraordinary gain or loss Income tax on extraordinary gain NET INCOME (LOSS) $4,815,000 $5,275,665