bankruptcy in 2009, however red flags existed long before the firm went bankrupt. Using the information from the common size financial statements and growth rates given discuss the red flags that existed as early as 2010. (10 MARKS) Balance Skeet 2009 2008 37.6 Cash AR Trvatory Ppd. cap. de taxes other Total current sets 9 43.0 4.1 49 929 523 65 96.5 65 6 100.0 3.0 3 100.0 Net property and equipment Other as Total sets Line of credit AP Accred penses Times payable Total Content libilities Common stock Retained earnings Total liabilities and shareholders' equity 258 61 113 = 437 140 9.6 130 36.9 25.1 31.5 100.0 318 313 100.0 Income Statement 2009 100 Net sales Cost of sales Gross profit Selling general and admin. exp. Interest expense Earnings before income taxes Income taxes Net earnings 65.6 34.4 26.7 20 5.7 2.2 3.5 2008 9 100.0 58.1 41.9 25.0 20 149 6.0 89 2007 % 100.0 577 423 23.8 1.8 16.7 6.9 98 Sales growth Operating expense growth 09-08 46% 56% 08-07 176% 190%