$9.$ Perform a horizontal analysis for the MLC income statement $($Table $47)$ for $2011$ and $2012.$ Write an explanation of this analysis.

$10.$Using both the balance sheet $($Table $44)$ and the income statement $($Table $47)$ for the MLC$,$ answer the following:

a$.$Calculate the following ratios for $2013$: inventory turnover, fixed asset turnover, and total asset turnover.

b$.$In a written explanation, describe what each ratio means.

c$.$In a brief paragraph, describe how well you believe the MLC is managing its assets.

Table $44$ Moderately Large Corporation Consolidated Balance Sheet

Moderately Large Corporation Consolidaed Balance Sheet $($in thousands except share data$)$

Fiscal Year Ended

Dec. $31,2013$

Dec. $31,2012$

ASSETS

Current assets:

$$

Cash and cash equivalents

$$1,369$

$$1,427$

$$

Accounts receivable, net

$1,008$

$876$

$$

Inventories

$1,489$

$481$

$$

Prepaid expenses and other current assets

$157$

$126$

$$

Deferred income taxes, net

$44$

$40$

$$

$$

Total current assets

$4,066$

$2,950$

Property, plant and equipment, net

$3,137$

$2,287$

Other assets

$168$

$161$

$$

TOTAL ASSETS

$$7,371$

$$5,398$

LIABILITIES AND SHAREHOLDERS$$ EQUITY

Current liabilities:

$$

Accounts payable

$$429$

$$242$

$$

Accrued compensation and related costs

$104$

$98$

$$

Accrued taxes

$132$

$141$

$$

Current portion of long$-$term debt

$89$

$82$

$$

$$

Total current liabilities

$754$

$563$

Long$-$term debt

$2,630$

$1,830$

$$

$$

Total liabilities

$3,384$

$2,392$

Shareholders$$ equity:

$$

Common stock $($$$0\mathrm{.}1$ par value$)$authorized$,4,000,000$ shares; issued and outstanding, $3,500,000.$

$350$

$350$

$$

Paid$-$in capital in excess of par

$2,415$

$2,415$

$$

Retained earnings

$1,222$

$241$

$$

$$

Total shareholders$$ equity

$3,987$

$3,006$

$$

TOTAL LIABILITIES AND SHAREHOLDERS$$ EQUITY

$$7,371$

$$5,398$

TABL $4-7$ Moderately Large Corporation Consolidated Statement of Earnings

Consolidated Statement of Earnings $($in thousands, except earning per share$)$

Fiscal Year Ended:

Dec. $31,2013$

Dec. $31,2012$

Dec. $31,2011$

Net revenues

$$

Cash Sales

$$2,888$

$$2,751$

$$2,456$

$$

Credit Sales

$6,046$

$5,258$

$4,572$

$$

$$

Total Net Revenues

$8,935$

$8,009$

$7,028$

Cost of Sales

$5,361$

$4,405$

$3,725$

$$

Gross Profit

$3,574$

$3,604$

$3,303$

Salaries

$1,258$

$1,183$

$1,112$

Insurance

$155$

$116$

$93$

Depreciation

$150$

$135$

$122$

General and administrative expenses

$489$

$479$

$361$

$$

Subtotal operating expenses

$2,052$

$1,913$

$1,687$

Operating income

$1,522$

$1,691$

$1,616$

Interest expense

$10$

$11$

$11$

Earnings before income taxes

$$

$1,512$

$1,680$

$1,605$

Income taxes

$529$

$588$

$562$

Net Earnings

$ $983$

$$1,092$

$$1,043$

Per Common Share

$$

Net Earnings Basic

$ $0\mathrm{.}28$

$ $0\mathrm{.}31$

$ $0\mathrm{.}30$

$$

Net Earnings Diluted

$ $0\mathrm{.}25$

$ $0\mathrm{.}27$

$ $0\mathrm{.}26$

Weighted average shares outstanding:

$$

Basic

$3,500$

$3,500$

$3,500$

$$

Diluted

$4,000$

$4,000$

$4,000$