B&L Landscapes, Inc. Mini Practice Part 3

Bill Graham and Larry Miller incorporated B&L Landscapes, Inc. on July 1, 2014. The business consists of lawn care and sprinkler system installations. In addition, they also sell two types of fertilizer.

At the end of the first year, Bill and Larry have asked you to analyze their first year of operations and given them some suggestions on areas that may need improvement as they move into their second year.

Below are the balance sheets for the date of incorporation and the end of the first year of operations.

Additional Information:

Net Income for the year ending June 30, 2015 was $32,500 and $2,000 was paid in dividends.

Net Sales for the year ending June 30, 2015 was $221,000.

Industry Averages Landscaping Services Assets
Current assets	45%
Plant assets (net)	55%
Total assets	100%
Liabilities
Current Liabilities	18%
Long-term liabilities	15%
Total liabilities	33%
Stockholders' Equity
Common stock, $1 par	10%
Preferred stock, $100 par	20%
Retained earnings	37%
Total stockholders' equity	67%
Total liabilities and stockholders' equity 100% Instructions: 1. Using the two balance sheets provided, prepare a horizontal and vertical analysis for the period ending June 30, 2015. You only need to complete one vertical analysis using the June 30, 2015 balance sheet values. 2. Compare the vertical analysis results with the industry average information provided and identify any areas that you believe merit further investigation, including why you would investigate them further and likely reasons for the results. 3. Calculate the following ratios for the company: A. Current Ratio B. Acid-test ratio C. Profit Margin D. Asset Turnover E. Return on Assets F. Debt to Assets Ratio