After graduating from college in May 2018, Ryan Crews started his career in finance at W&T Corporation, a small to medium-sized warehouse distributor in Nashville, Tennessee. The company was founded by David Winston and Colin Tabor in 2005, after they had worked together in management at Walmart. Although Crews had an offer from Sam's Club, he became excited about the opportunity with W&T. For W&T, 2017 turned out to be a good financial year. But in 2018, the company experienced a 5.3 percent sales reduction, where sales declined from $5.7 million to $5.4 million. The downturn then led to other financial problems, including a 50 per cent reduction in the company's stock price. The share price went from $36 per share at the end of 2017 to $18 per share at the end of 2018! David Winston and Colin Tabor want to understand what may have happened. Financial information for W&T for both years is shown below, where all the num- bers, except for per-share data, are shown in thousands. a. Using what you have learned in this chapter and Chapter 3, prepare a finan cial analysis of W&T, comparing the firm's financial performance between the b. What conclusions can you make from your analysis? c. What recommendations would you make to management? two years. W&T Corporation Income Statements $ 5,700 (3.700) $ 2,000 2018 $ 5.400 (3.600) $ 1,800 Sales Cost of goods sold Gross profits Operating expenses: Selling and G&A expenses Depreciation expenses Total operating expenses Operating profits Interest expense Earnings before taxes (taxable income) Income taxes Net Income Additional information: Number of common shares outstanding Dividends paid to stockholders Market price per share $ (820) (1340) $(1.160) 840 (200) $ 640 $ (780) (500) $(1,280) $ 520 (225) $ 245 $ (65) (230) 410 $180 150 150 $ 120 120 $ 136 $ 18 WET Corporation Balance Sheets 2017 2018 $ 300 Assets Cash Accounts receivable Inventories 700 $ 495 915 780 600 Other current assets 125 $ 1,725 $ 4,650 1.700) $ 2.950 $4675 160 $ 2,350 $ 4,950 12.200 $ 2750 $ 5.100 $ 400 Total current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets Liabilities (Debt) and Equity Accounts payable Short-term notes payable Total current liabilities Long-term debt Total liabilities Common equity Common stock Retained earnings Total common equity Total liabilities and equity 250 $ 650 1250 $1.500 $ 640 300 $ 940 1.325 $ 2,265 $ 1.100 1.625 $ 2.175 $24675 $ 1.100 1.735 $ 2,835 $ 5.100