Big Spenders Inc. has been working on diversifying its portfolio of investments and requires accounting advice for a decision between two car cleaning and detailing companies. Your responsibility is to perform a comparative analysis of the profitability of two potential equity Investments. Your engagement manager on this job has given you a brief background on the operations of the two companies: Auto Wash Bot Ltd. (AWBL) has recently completed the research and development of a new touch screen app for all mobile devices. This new technology is both more user friendly than the current technology on the market. Auto Wash Bot Ltd has just signed a major contract to provide the Auto Wash Bot terminal to a major producer of mobile devices. The founder of the business would like to sell a 50% interest in the business for $100,000 in order to finance further expansion of operations. Popeye's Muscle Wash Ltd (PMWL) is a self-service, coin operated car wash located in a busy residential area. The company provides all of the services of a typical car wash, including soap, wax, vacuuming as well as pressure washing. PMWL has been long established and enjoys the loyalty and repeat business of many local residents. The current owner is getting up in age and would like to sell 100% ownership Interest in the business for $100,000 to pursue retirement. The current year's income statement is consistent with prior years. One of the first tasks in the analysis of the potential equity acquisition is an assessment of each company's current and future profitability. Your manager has provided you with coples of each company's Income statement (see below). Next, you are to calculate the expected return on the investment for each company. You have been asked to discuss any other issues that you believe are relevant to the investment decision, The Consulting Manager would like you to prepare the report and have it on his desk for review first thing tomorrow morning. Once reviewed, this report will be submitted to Big Spenders Inc in order to support their decision. surment decision The Consulting Manager would like you to prepare the report and have it on his desk for review first thing tomorrow morning. Once review submitted to Big Spenders Inc. In order to support their decision. Auto Wash Bot Ltd Income Statement For the Year Ended December 31, 2015 Revenue $375,000 Cost of Goods Sold 86,250 Gross Profit 288,750 Other Expenses Advertising 35,400 Office Expense 22,750 Research 195,000 Wages and Salaries 40,000 Total Other Expenses 293,150 Income Before Taxes (4,400) Income Tax 0 Net Income $(4,400) Popeye's Muscle Wash Ltd Assignment Net Income $(4,400) Popeye's Muscle Wash Ltd Income Statement For the Year Ended December 31, 2015 Revenue $375,000 Cost of Goods Sold 163,125 Gross Profit 11,875 Other Expenses Advertising 5,200 Office Expense 17,400 Repairs and Maintenance 85,000 Wages and Salaries 50,000 Total Other Expenses 157,600 Income Before Taxes 54,275 Income Tax* 8,413 Net Income $45,862 Part 2- Read and understand the financial statements Similar to your past project, an important part of the analysis of the potential equity investment is an assessment of each company's current and future profitability as well as their financial soundness. You will have to extract details from their intome statements in the last five years for both the target and the competitor companies. You can obtain this information directly after you have performed the stock screening on the TSX website, or you can go to the SEDAR filing system to search for Canadian companies financial statements (https://www.sedar.com). Part 3- Perform Financial Statement Analysis Based on the information obtained from the two companies'income statements as well as the background information, you are to compare the performance of the two companies using financial statement analysis. From the BUSI 1043 course that you took in the past at Yorkville University, you know there are at least the horizonal analysis, the vertical analysis and the ratio analysis that you can perform. You have been asked to discuss any other issues that you believe are relevant to the investment decision and make a recommendation to Big Spenders Inc, for whether your target would be a good investment. Big Spenders Inc. has been working on diversifying its portfolio of investments and requires accounting advice for a decision between two car cleaning and detailing companies. Your responsibility is to perform a comparative analysis of the profitability of two potential equity Investments. Your engagement manager on this job has given you a brief background on the operations of the two companies: Auto Wash Bot Ltd. (AWBL) has recently completed the research and development of a new touch screen app for all mobile devices. This new technology is both more user friendly than the current technology on the market. Auto Wash Bot Ltd has just signed a major contract to provide the Auto Wash Bot terminal to a major producer of mobile devices. The founder of the business would like to sell a 50% interest in the business for $100,000 in order to finance further expansion of operations. Popeye's Muscle Wash Ltd (PMWL) is a self-service, coin operated car wash located in a busy residential area. The company provides all of the services of a typical car wash, including soap, wax, vacuuming as well as pressure washing. PMWL has been long established and enjoys the loyalty and repeat business of many local residents. The current owner is getting up in age and would like to sell 100% ownership Interest in the business for $100,000 to pursue retirement. The current year's income statement is consistent with prior years. One of the first tasks in the analysis of the potential equity acquisition is an assessment of each company's current and future profitability. Your manager has provided you with coples of each company's Income statement (see below). Next, you are to calculate the expected return on the investment for each company. You have been asked to discuss any other issues that you believe are relevant to the investment decision, The Consulting Manager would like you to prepare the report and have it on his desk for review first thing tomorrow morning. Once reviewed, this report will be submitted to Big Spenders Inc in order to support their decision. surment decision The Consulting Manager would like you to prepare the report and have it on his desk for review first thing tomorrow morning. Once review submitted to Big Spenders Inc. In order to support their decision. Auto Wash Bot Ltd Income Statement For the Year Ended December 31, 2015 Revenue $375,000 Cost of Goods Sold 86,250 Gross Profit 288,750 Other Expenses Advertising 35,400 Office Expense 22,750 Research 195,000 Wages and Salaries 40,000 Total Other Expenses 293,150 Income Before Taxes (4,400) Income Tax 0 Net Income $(4,400) Popeye's Muscle Wash Ltd Assignment Net Income $(4,400) Popeye's Muscle Wash Ltd Income Statement For the Year Ended December 31, 2015 Revenue $375,000 Cost of Goods Sold 163,125 Gross Profit 11,875 Other Expenses Advertising 5,200 Office Expense 17,400 Repairs and Maintenance 85,000 Wages and Salaries 50,000 Total Other Expenses 157,600 Income Before Taxes 54,275 Income Tax* 8,413 Net Income $45,862 Part 2- Read and understand the financial statements Similar to your past project, an important part of the analysis of the potential equity investment is an assessment of each company's current and future profitability as well as their financial soundness. You will have to extract details from their intome statements in the last five years for both the target and the competitor companies. You can obtain this information directly after you have performed the stock screening on the TSX website, or you can go to the SEDAR filing system to search for Canadian companies financial statements (https://www.sedar.com). Part 3- Perform Financial Statement Analysis Based on the information obtained from the two companies'income statements as well as the background information, you are to compare the performance of the two companies using financial statement analysis. From the BUSI 1043 course that you took in the past at Yorkville University, you know there are at least the horizonal analysis, the vertical analysis and the ratio analysis that you can perform. You have been asked to discuss any other issues that you believe are relevant to the investment decision and make a recommendation to Big Spenders Inc, for whether your target would be a good investment