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Calculate Trend% and Common% 1) Analyze liquidity. 2) Analyze profitability. 3) What items in the statement of cash flows should be of concern to ABC

Calculate Trend% and Common%

1) Analyze liquidity.

2) Analyze profitability.

3) What items in the statement of cash flows should be of concern to ABC company

ABC Company
Comparative Balance Sheets
As of December 31, 2015 & 2014
Trend % Common % Common %
2015 2014 (2014 to 2015) 2015 2014
Assets
Current assets
Cash $15,875 $46,200
Accounts receivable 300,000 224,300
Inventory 259,900 202,600
Prepaid expenses 14,700 28,200
Total current assets 590,475 501,300
Long-term investments 123,000 175,000
Plant & equipment 882,000 761,000
Less Accumulated depreciation 215,500 193,300
Net Plant & equipment 666,500 567,700
Total assets $1,379,975 $1,244,000
Liabilities & Stockholder's Equity
Current liabilities
Accounts payable $184,900 $242,100
Accrued liabilities 9,100 17,200
Income taxes payable 50,800 44,500
Total current liabilities 244,800 303,800
Bonds payable 233,000 122,000
Total liabilities 477,800 425,800
Stockholder's equity
Common stock 622,500 655,000
Retained earnings 279,675 163,200
Total stockholder's equity 902,175 818,200
Total liabilities & stockholder's equity $1,379,975 $1,244,000
ABC Company
Comparative income statements
For the year's ended December 31, 2015 & 2014
Trend % Common % Common %
2015 2014 (2014 to 2015) 2015 2014
Sales $1,106,800 $1,000,000
Cost of goods sold 637,500 600,750
Gross margin 469,300 399,250
Selling & Administrative expenses 249,550 259,250
Net operating income 219,750 140,000
Non-operating items:
Gain on sale of investments 25,500 -
Gain on sale of equipment 31,800 -
Interest expense 23,300 12,200
Income before tax 253,750 127,800
Income tax expense 76,125 38,340
Net income $177,625 $89,460
2015 2014
Accounts receivable turnover 4.222 4.458
Current ratio 2.412 1.650
Debt ratio 0.346 0.342
Earnings per share 0.355 0.179
Inventory turnover 2.757 2.965
Quick ratio 1.290 0.890
Return on assets 0.148 0.079
Return on equity 0.207 0.109
Return on sales 0.160 0.089
Times interest earned 11.891 11.475
ABC Company
Statement of Cash flows
For the year ended December 31, 2015
Cash flows from operating activities:
Net Income 177,625
Adjustments to net income:
Depreciation expense $62,200
Increase in accounts receivable (75,700)
Increase in inventory (57,300)
Decrease in prepaid expenses 13,500
Decrease in accounts payable (57,200)
Decrease in accrued liabilities (8,100)
Increase in income taxes payable 6,300
Gain on sale of investments (25,500)
Gain on sale of equipment (31,800) (173,600)
Net cash provided by operating activities $4,025
Cash flows from investing activities:
Sold equipment $170,800
Purchased equipment (300,000)
Sold long-term investments 77,500
Net cash used by investing activities (51,700)
Cash flows from financing activities:
Bonds issued $141,000
Bonds retired (30,000)
Common stock retired (32,500)
Dividends paid (61,150)
Net cash provided by financing activities 17,350
Net change in cash $(30,325)
Add beginning cash 46,200
Cash balance December 31, 2015 $15,875

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