CaseC

NorthernLightsCommunications

PhoneProblems

The following financial statements are for the Northern Lights Corporation. The companyprovides payphone serviceat manyof the small conveniencestores in Ontario and Manitoba.Thebusiness was "meetingplan"until 2011 whenaproblem developed.

BalanceSheet

ASSETS	2010	2011
Current Assets:
Cashandcashequivalents	$668,778	$592,491
Accountsreceivable	4,453,192	3,888,621
Inventories	137,036	112,699
Prepaidexpensesand othercurrentassets	411,990	407,274
Total currentassets:	$5,670,996	$5,001,085
Fixedassets:
Property, plant,and equipment(net)	$12,935,453	$16,466,001
Sitelicenses	1,941,467	3,771,571
Investmentsinaffiliates	164,549	251,672
Totalfixed assets	$15,041,469	$20,489,244
Otherassets	681,754	455,488
TOTAL ASSETS	$21,394,219	$25,945,817
DEBT(LIABILITIES)ANDEQUITY
CurrentLiabilities
Notespayable	$659,604

Currentportion ofother notespayable	1,491,767	$3,320,197
Currentportion ofcapital leaseobligations	1,094,381	668,826
Accountspayable	310,358	835,384
Accruedtelecommunicationsand otherexpenses	2,971,935	3,036,633
Incometaxespayable	256,140	475,945
Totalcurrentliabilities	$6,784,185	$8,336,985
Long-termliabilities:
Notespayable, lesscurrent portion	$6,605,835	$10,030,963
Capitallease obligations	780,593	56,219
Deferredincome taxliability	342,359	306,021
Totallong-termliabilities	$7,728,787	$10,393,203
Preferredstock	$2,400,000	$2,400,000
Commonstockholders' equity:
CommonStock	$1,438,903	$1,438,903
Additionalpaid-incapital	10,630	10,630
Retainedearnings	3,031,714	3,366,096
Total ownershipequity	$4,481,247	$4,815,629
TOTALDEBTANDEQUITY	$21,394,219	$25,945,817

IncomeStatementsforNorthernLights Communications,Inc.

2010		2011
SalesRevenue
Pay-phonecoin calls	$14,036,665	$17,615,069
Automatedoperator,routed calls	17,049,394	15,932,154
Other	505,581	1,363,738
Total revenues	$31,591,640	$34,910,951
Operatingexpenses:
Telephonecharges	$7,851,842	$9,078,851
Commissions	4,909,445	5,627,288
Telecommunicationsfees	1,821,930	1,519,095
Depreciationand amortization	4,298,090	5,353,797
Fieldoperationspersonnel	2,016,935	2,988,456
Chargebacksanddoubtful accounts	1,104,896	1,111,857
Generalandadministrative expenses	5,520,405	6,435,919
Total operatingexpenses	$27,523,543	32,115,263
Operatingincome	$4,068,097	$2,795,688
Otherincome(expenses):
Interestexpense	($1,631,416)	($1,816,222)
Interestincome	57,278	5,069
Lossesonaffiliates	( 34,608)	( 108,556)
Unusualgains	1,160,238	27,234
Totalotherincome (expenses)	($448,508)	($1,892,475)
Incomebeforetaxes	$3,619,589	$903,213
Provisionfor incometaxes	1,339,140	424,831
Net income	$2,220,449	$478,382

Questions

Q 1. Usingfinancialratios, comparethefirm's financialperformance for2010and2011.

Q 2. Whatdoyouthinkmighthavehappened from2010 to2011?

everything has been provided also attachement are also there plz check

Case C Northern Lights Communications Case C Northern Lights Communications Phone Problems The following nancial statements are for the Northern Lights Corporation. The company provides pay phone service at many of the small convenience stores in Ontario and Manitoba. The business was \"meeting plan\" until 2011 when a problem developed. Balance Sheet ASSETS Current Assets: Cash and cash equivalents $ 668,778 $ 592,491 Accounts receivable 4,453,192 3,888,621 Inventories 137,036 1 12,699 Prepaid expenses and 411,990 407,274 other current assets Total current assets: $ 5,670,996 $5,001,085 Fixed assets: Property, plant, and $12,935,453 $16,466,001 equipment (net) Site licenses 1,941,467 3,771,571 Investments in affiliates 164,549 251,672 Total fixed assets $15,041,469 $20,489,244 Other assets 681,754 455,488 TOTAL ASSETS $21,394,219 $25,945,817 DEBT (LIABILITIES) AND EQUITY Current Liabilities Notes payable $ 659,604 Case C Northern Lights Communications 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 1,491,767 1,094,381 310,358 2,971,935 256 140 I $ 6,784,185 $ 6,605,835 780,593 342,359 $ 7,728,787 $ 2,400,000 $ 1,438,903 10,630 3,031,714 4,481,247 $21,394,219 $3,320,197 668,826 835,384 3,036,633 475 945 I $ 8,336,985 $10,030,963 $10,393,203 $ 2,400,000 $ 1,438,903 10,630 3,366,096 4,815,629 $25,945,817 Case C Northern Lights Communications Income Statements for Northern Lights Communications, Inc. 2010 2011 Sales Revenue Pay-phone coin calls Automated operator, routed calls Other Total revenues Operating expenses: Telephone charges Commissions Telecommunications fees 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 $14,036,665 17,049,394 505,581 $31,591,640 $ 7,851,842 4,909,445 1,821,930 4,298,090 2,016,935 1,104,896 5 520 405 $27,523,543 $ 4,068,097 ($1,631,416) 57,278 (34,608) 1 160 238 $ 448,508) $3,619,589 1 339 140 _lI $2,220,449 $17,615,069 15,932,154 1,363,738 $34,910,951 $ 9,078,851 5,627,288 1,519,095 5,353,797 2,988,456 1,111,857 6 435 919 32,115,263 $2,795,688 ($1,816,222) 5,069 ( 108,556) m $ 1,892,475) Case C- Northern Lights Communications 4 Questions 1 . Using financial ratios, compare the firm's financial performance for 2010 and 201 1. 2 . What do you think might have happened from 2010 to 201 1