1. Calculate liquidity ratios, return on investment, return on equity, asset turnover ratio, inventory turnover ratio, working capital.
2. Then, if you understand what these ratios mean, use them to evaluate performance and answer Q1.
3. For Q2, the above ratio analysis will indicate what changed between 2010 and 2011.
4. Review the class notes on finance.

Marks:

1. Calculation of the ratios . 10 points (Q1: partly)
2. Showing understanding of what the ratios mean (Q1, Q2) ... 20 points

Income Statements for Northern Lights Communications, Inc. 2010 2011 $14.036,685 17040394 $17,615,000 15,932,154 505.581 531,591 640 1,363.738 $34,910,951 $7.851 342 4.909.445 1.821.930 4298 090 $ 9,078,851 5,627.268 1,519,096 5,353,797 2016.935 1.104,896 2,988,456 1,111,857 Sales Revenue Pay-phone coin calls Automated operator, routed calls Other Total revenues Operating expenses Telephone charges Commissions Telecommunications focs Depreciation and amortization Field operations personnel Chargebacks and doubtful accounts General and administrative expenses Total operating expenses Operating Income Other Income (expenses): Interest expense Interest income Losses on affiliates Unusual gains Total other income (expenses) Income before taxes Provision for income taxes Net Income 5.520.405 6,435 919 $27523.547 $ 4 068 OSZ 32.115.20 $2,795,588 ($1,631,416) 57 278 (34,606) 1.160.238 $448.500 ($1,816,222) 5.069 [108,556) 27.234 1802475 $3.619.589 1339.240 $2.220.149 $ 903,213 424.001 $478.382 1,491,767 $3,320,197 1,094.381 668,826 310.358 2,971,935 835,384 3,036,633 256,140 $ 6,784,185 475.945 $ 8,336,985 $ 6,605,835 Current portion of other notes payable Current portion of capital lease obligations Accounts payable Accrued telecommunications and other expenses Income taxes payable Total current liabilities Long-term liabilities: Notes payable, less current portion Capital lease obligations Deferred Income tax liability Total long-term liabilities Preferred stock Common stockholders equity: Common Stock Additional paid-in capital Retained earnings Total ownership equity TOTAL DEBT AND EQUITY $10,030,963 56,219 780,593 342 359 $ 7,728,787 $ 2,400,000 306.021 $10,393,203 $ 2,400,000 $ $ 1,438,903 10.630 3,031,714 $ 4,481247 $21.394,219 $1,438,903 10.630 3,366,096 $ 4,815,629 $25.945,817 Balance Sheet 2010 2011 S 668,778 4,453,192 137,036 411.990 $ 592,491 3,888,621 112,699 407.274 ASSETS Current Assets: : Cash and cash equivalents Accounts receivable Inventories Prepaid expenses and other current assets Total current assets: Fixed assets: : Property, plant, and equipment (net) Site licenses Investments in affiliates Total fixed assets Other assets TOTAL ASSETS $ 5,670,996 $5.001,085 $12,935,453 $16,466,001 1,941,467 164.549 $15,041,469 681.754 $21,394,219 3,771,571 251,672 $20,489.244 455.488 $25.945,817 DEBT (LIABILITIES) AND EQUITY Current Liabilities Notes payable $ 659,604