Case Financial Ratios A financial ratio analysis will spotlight potential issues that a business may not even be aware of. A good counselor follows several steps. The first is listening to the client's story. Make notes. The second step is performing a complete financial analysis. You must understand the ratios, and what they are telling you. There are many financial ratios, but not every ratio is needed in every case. However, there are several ratios that are needed in every instance. These include the liquidity ratios, both current and quick, the solvency ratio, debt to equity ratio, inventory turnover ratio, days receivable, and payables, and net profit ratio. Other ratios that may be needed, at your discretion on case by case basis, include: 1. Profitability Ratios A. ROA B. ROE C. COGS D. ROI 2. Efficiency Ratios A. Accounts receivable ratio B. Fixed asset turnover 3. Coverage Ratio A. Times interest earned B. Debt service ratio 4. Market Ratios A. Dividend yield B. P/E Ratio C. EPS D. Dividend Payout Ratio Analyze the company with the ratios you deem important to this case. The client has come to you for assistance. The owner wants to expand to another location in Raleigh. Should the owner continue on this venture? Alignment Number Cell Styles Cells Editing Ideas F G H L M N The bakery Balance Sheet Current Assets 2013 2014 2015 ash Accounts Receivable inventory Deposits Prepaid Expenses Loan to employee Loan to stockholder TOTAL CURRENT ASSETS 27190 119731 43979 3231 6375 -7973 139597 26200 650 3231 94831 29354 1725 8965 425 55330 3.4637 200506 195342 184742 FIXED ASSETS Property. Plant, & Equipment Accumulated Depreciation 667281 -260578 690456 -306209 712332 -372395 Total Fixed Assets 406703 384247 319937 Other Assets Intangibles Accumulated Amortization 112207 64128 112207 112207 -73129 Total Other Assets 48079 42225 39078 Total Assets 655288 622814 561757 Current Liabilites 162161 30609 123159 40877 Accouts payable Current longterm debt Federal tax payable sales tax Accrued payroll Payroll taxes payable 133818 66919 2840 1413 18757 272 1023 16707 114 24551 7620 Sheet1 + aste > BI Alignment Number Number Format as Table Cell Styles Cells Editing Ideas 31 F K . TOTAL CURRENT LIABILITIES 224027 212710 197021 Long term liabilites Notes payable (bank) Loans from stockholders 269139 26500 257911 181748 5 TOTAL LONG TERM LIBILITIES 295639 257911 181748 519666 470621 378769 26325 -183736 293033 26325 -183736 309604 26325 181716 342398 7 Total Liabilities B 9 Equity Common stock -1 Treasury stock 2 Retained Earnings 53 54 TOTAL EQUITY 55 56 TOTAL LIABILITIES and EQUITY 57 58 s9 60 61 INCOME STATEMENT 135622 152193 184958 655288 622514 536757 2386446 24337 1056 107844 1163712 2186446 2193716 63 Revenue 64 6S Sales 66 Other income 67 Total revenue 68 COGS 69 Purchas 70 Labor 71 Commissions 72 Truck expenses 73 Delivery Equipment maintenance 74 Equipment Rental 4511 1337003 56078 2020 302 740446 628955 0 0 SSS 11660 0 10487 100N Sheet Calibri (Body) Share ID 11 AA Paste BIU % conditional Formatting Format as Table 2 Cell Styles 4 Alignment Number Cells Editing Ideas 91 D E H M 2 Truck expenses 3 Delivery Equipment maintenance 4 Equipment Rental *5 Freight *6 Taxes - Payroll 27 Utilities 28 Supplies 79 30 Total COGS 0 59455 11666 6191 48115 19377 79248 20879 0 10487 24461 0 26910 116115 32498 0 19963 26004 0 14689 93484 1593453 1671823 2174719 82 Gross Profit 792993 921443 990993 769649 891260 942396 23344 -2237 21107 3257 84 Total operating expenses 85 86 Net Income 87 Gain/loss on asset sale 89 Income taxes 90 Net income/loss 91 92 93 94 95 30175 4526 25649 7111 41266 17850 97 98 99 100 101 102 101 104 105 106 107 Cwrs AR VIS M Pop Lom Les TOTAL ELRRENT ASSET HN FRED ASSETS Property 13 Ohrid Total Marrai C. Poby 115 1 830 4111 Ard Play TOTAL CURRENTLURILITIES 21 Lego New TOTAL LONG TERLIHAT Tul SI C Tror Refren 2. RE 20 TH TOTAL Boum me TOTALLALES TOUTY IMENTATEMENT Sales w Total DENIS Trid Liar T . Supple THIS 2 Grote Game IR 2011 The bakery Balance Sheet Current Assets 2013 2015 cash Accounts Receivable Inventory Deposits Prepaid pes Loin temployee Loan to stockholder TOTAL CURRENT ASSETS 27190 119731 41979 12:31 6175 -7973 139597 26200 650 1231 -5888 94831 29354 1725 1965 425 S5110 34637 200506 19.142 184242 FIXED ASSETS Property. Plant, & Equipment Accumulate Depreciation 667281 -260578 6256 -306209 712332 -372395 Total Fixed Assets 405703 Total Assets 6552XX 632814 563757 Current Liabilit 13368 Accouts payable Cument long term dett Federal tax payable sales tax Accrued payroll Payroll taxes payable 2848 1413 18757 272 162951 100 1726 1000 16707 34 123159 4077 0 814 24551 7620 TOTAL CURRENT LLABILITIES 224027 212710 197021 Long term babies Natus payable thank) Lons from stockholders 20130 257911 15174 26.500 TOTAL LONG TERM LIBILITIES 295639 257911 INI 74N Total Liabilities 519666 470621 378769 26326 Equity Como Mock Treasury stock Retained Earnings 26325 181736 293033 26125 -180736 342398 TOTALEQUITY 1152 152193 184988 TOTAL LIABILITIES and EQUITY 685288 622814 536757 INCOME STATEMENT Revenc 2336646 2463373 129893 2595266 3057868 107144 3165713 21846 1332005 740446 28933 0 Sales Other come Total Tv COURS Purchases Labor Commissione Trackspens Delivery liquipment maintenance Equipment Rental Freight Taxes. Paytall Utilities Supplies 59455 11666 619 4115 19377 793 845136 62020 NOT ZON20 0 104NT 24461 0 26913 116115 0 12498 0 19961 2600+ 0 14649 93454 Total COGS 159451 1671121 2174719 Gross Profit 79200 92140 990993 Tarating penis T60649 N91268 042195 21444 Net income Gaia loss an asset sale EBIT Income taxes Noticon los 21107 2257 1750 30175 4526 25649 19597 2331 4120 Case Financial Ratios A financial ratio analysis will spotlight potential issues that a business may not even be aware of. A good counselor follows several steps. The first is listening to the client's story. Make notes. The second step is performing a complete financial analysis. You must understand the ratios, and what they are telling you. There are many financial ratios, but not every ratio is needed in every case. However, there are several ratios that are needed in every instance. These include the liquidity ratios, both current and quick, the solvency ratio, debt to equity ratio, inventory turnover ratio, days receivable, and payables, and net profit ratio. Other ratios that may be needed, at your discretion on case by case basis, include: 1. Profitability Ratios A. ROA B. ROE C. COGS D. ROI 2. Efficiency Ratios A. Accounts receivable ratio B. Fixed asset turnover 3. Coverage Ratio A. Times interest earned B. Debt service ratio 4. Market Ratios A. Dividend yield B. P/E Ratio C. EPS D. Dividend Payout Ratio Analyze the company with the ratios you deem important to this case. The client has come to you for assistance. The owner wants to expand to another location in Raleigh. Should the owner continue on this venture? Alignment Number Cell Styles Cells Editing Ideas F G H L M N The bakery Balance Sheet Current Assets 2013 2014 2015 ash Accounts Receivable inventory Deposits Prepaid Expenses Loan to employee Loan to stockholder TOTAL CURRENT ASSETS 27190 119731 43979 3231 6375 -7973 139597 26200 650 3231 94831 29354 1725 8965 425 55330 3.4637 200506 195342 184742 FIXED ASSETS Property. Plant, & Equipment Accumulated Depreciation 667281 -260578 690456 -306209 712332 -372395 Total Fixed Assets 406703 384247 319937 Other Assets Intangibles Accumulated Amortization 112207 64128 112207 112207 -73129 Total Other Assets 48079 42225 39078 Total Assets 655288 622814 561757 Current Liabilites 162161 30609 123159 40877 Accouts payable Current longterm debt Federal tax payable sales tax Accrued payroll Payroll taxes payable 133818 66919 2840 1413 18757 272 1023 16707 114 24551 7620 Sheet1 + aste > BI Alignment Number Number Format as Table Cell Styles Cells Editing Ideas 31 F K . TOTAL CURRENT LIABILITIES 224027 212710 197021 Long term liabilites Notes payable (bank) Loans from stockholders 269139 26500 257911 181748 5 TOTAL LONG TERM LIBILITIES 295639 257911 181748 519666 470621 378769 26325 -183736 293033 26325 -183736 309604 26325 181716 342398 7 Total Liabilities B 9 Equity Common stock -1 Treasury stock 2 Retained Earnings 53 54 TOTAL EQUITY 55 56 TOTAL LIABILITIES and EQUITY 57 58 s9 60 61 INCOME STATEMENT 135622 152193 184958 655288 622514 536757 2386446 24337 1056 107844 1163712 2186446 2193716 63 Revenue 64 6S Sales 66 Other income 67 Total revenue 68 COGS 69 Purchas 70 Labor 71 Commissions 72 Truck expenses 73 Delivery Equipment maintenance 74 Equipment Rental 4511 1337003 56078 2020 302 740446 628955 0 0 SSS 11660 0 10487 100N Sheet Calibri (Body) Share ID 11 AA Paste BIU % conditional Formatting Format as Table 2 Cell Styles 4 Alignment Number Cells Editing Ideas 91 D E H M 2 Truck expenses 3 Delivery Equipment maintenance 4 Equipment Rental *5 Freight *6 Taxes - Payroll 27 Utilities 28 Supplies 79 30 Total COGS 0 59455 11666 6191 48115 19377 79248 20879 0 10487 24461 0 26910 116115 32498 0 19963 26004 0 14689 93484 1593453 1671823 2174719 82 Gross Profit 792993 921443 990993 769649 891260 942396 23344 -2237 21107 3257 84 Total operating expenses 85 86 Net Income 87 Gain/loss on asset sale 89 Income taxes 90 Net income/loss 91 92 93 94 95 30175 4526 25649 7111 41266 17850 97 98 99 100 101 102 101 104 105 106 107 Cwrs AR VIS M Pop Lom Les TOTAL ELRRENT ASSET HN FRED ASSETS Property 13 Ohrid Total Marrai C. Poby 115 1 830 4111 Ard Play TOTAL CURRENTLURILITIES 21 Lego New TOTAL LONG TERLIHAT Tul SI C Tror Refren 2. RE 20 TH TOTAL Boum me TOTALLALES TOUTY IMENTATEMENT Sales w Total DENIS Trid Liar T . Supple THIS 2 Grote Game IR 2011 The bakery Balance Sheet Current Assets 2013 2015 cash Accounts Receivable Inventory Deposits Prepaid pes Loin temployee Loan to stockholder TOTAL CURRENT ASSETS 27190 119731 41979 12:31 6175 -7973 139597 26200 650 1231 -5888 94831 29354 1725 1965 425 S5110 34637 200506 19.142 184242 FIXED ASSETS Property. Plant, & Equipment Accumulate Depreciation 667281 -260578 6256 -306209 712332 -372395 Total Fixed Assets 405703 Total Assets 6552XX 632814 563757 Current Liabilit 13368 Accouts payable Cument long term dett Federal tax payable sales tax Accrued payroll Payroll taxes payable 2848 1413 18757 272 162951 100 1726 1000 16707 34 123159 4077 0 814 24551 7620 TOTAL CURRENT LLABILITIES 224027 212710 197021 Long term babies Natus payable thank) Lons from stockholders 20130 257911 15174 26.500 TOTAL LONG TERM LIBILITIES 295639 257911 INI 74N Total Liabilities 519666 470621 378769 26326 Equity Como Mock Treasury stock Retained Earnings 26325 181736 293033 26125 -180736 342398 TOTALEQUITY 1152 152193 184988 TOTAL LIABILITIES and EQUITY 685288 622814 536757 INCOME STATEMENT Revenc 2336646 2463373 129893 2595266 3057868 107144 3165713 21846 1332005 740446 28933 0 Sales Other come Total Tv COURS Purchases Labor Commissione Trackspens Delivery liquipment maintenance Equipment Rental Freight Taxes. Paytall Utilities Supplies 59455 11666 619 4115 19377 793 845136 62020 NOT ZON20 0 104NT 24461 0 26913 116115 0 12498 0 19961 2600+ 0 14649 93454 Total COGS 159451 1671121 2174719 Gross Profit 79200 92140 990993 Tarating penis T60649 N91268 042195 21444 Net income Gaia loss an asset sale EBIT Income taxes Noticon los 21107 2257 1750 30175 4526 25649 19597 2331 4120