B m LL G A C D 47 Lester Corporation 48 Balance Sheets 49 For the Years Ended December 21, 2019 and 2018 50 51 2019 2018 52 Cash $160,000 80,000 53 Short-term investments 75,000 200,000 54 Accounts receivable 250,000 300,000 55 Inventory 500,000 450,000 56 Pre-paid costs 50,000 30,000 57 Property, Plant & Equip. 1,100,000 1,140,000 58 Total Assets 2.135,000 2.200,000 59 60 Liabilities and Stockholder Equity 61 62 Current liabilities 400,000 550,000 63 Mortgage payable 425,000 500,000 64 Stockholder equity 1.310.000 1,150,000 65 66 Total liabilities & S/E 2.135,000 2.200.000 67 68 Lester Corporation 69 Income Statement Cash Flow Statement 70 For the Year Ended December 31, 2019 71 72 Sales Revenue: Cash flow from Operations 73 Net Sales Revenue 2,500,000 74 Cash Flow From Investing 75 Cost of Goods Sold 2,000,000 76 Gross Profit 500,000 Cash Flow from Financing 77 Operating Expenses 250,000 78 Net Income before int. and taxe 250,000 Increase in Cash 79 Interest expense 50,000 80 Net Income before tax 200,000 Cash, January 1, 2019 81 Income tax expense 40,000 82 Net income 160,000 Cash, December 31, 2019 30,000 125,000 (75,000) 80,000 80,000 160.000 Sheet1 Sheet2 Sheet3 ul G C D E F 83 84 Other Information 85 Number of shares outstanding: 50,000 86 Stock price $40 per share 87 88 89 Industry Averages: 90 91 Liquidity 92 Current ratio: 3:1 93 Acid test ratio 1.3:1 94 Accounts receivable turnover 9 times per year 95 Inventory turnover 4 times per year 96 97 Profitablity 98 Gross profit % 17-18% 99 Profit margin 5% 100 Return on average stockholder equity 10% 101 Earnings per share $2.50 to 3.00 per share 102 Price earnings ratio 9 times earnings 103 104 Solvency 105 Debt to asset ratio 40% 106 107 b. Compare Rating 108 a. Compute Above Below 109 Computation: Excellent Averase Averass average 110 Liquidity 111 Current ratio for 2019 112 Acid test ratio for 2019 113 Accounts receivable tumover 114 Inventory tumover 115 116 Profitablity 117 Gross profit % 118 Profit Margin 119 Return on average stockholder equity Poor Sheet1 Sheet2 Sheet3 Calibri 11 BI USA + c D m F G A 122 123 Solvency 124 Debt to asset ratio for 2019 125 126 127 128 129 130 131 132 133 134 c. Comment 135 136 1. Liquidity 137 138 139 140 141 142 2. Profitability 143 144 145 146 147 3. Solvency 148 149 150 151 152 153 154 d. Decide - Lend? Yes/No, Why 155 156 157 158 159 160 161 Sheet1 Sheet2 Sheet3