Comprehensive Case (42 points)

OG Corporations balance sheet and income statement is listed below.

Balance Sheet This Year Last Year

Cash	50,000	40,000
Accounts receivable	80,000	60,000
Inventories	180,000	110,000
Plant & equipment	300,000	260,000
Less accumulated depreciation	-40,000	-20,000
Total assets	570,000	450,000
Accounts payable	100,000	150,000
Accrued liabilities	70,000	50,000
Mortgage payable	80,000
Common stock	130,000	90,000
Retained earnings	190,000	160,000
Total liabilities and equity	570,000	450,000

Income Statement This Year Last Year

Net Sales	680,000	600,000
Cost of goods sold	410,000	330,000
Gross profit	270,000	270,000
Operating expenses	190,000	192,000
Operating income	80,000	78,000
Interest expense	7,000	2,000
Profit before taxes	73,000	76,000
Taxes	22,000	22,800
Net income	51,000	53,200

Other data:

• Cash dividends paid this year were $21,000.
• The change in accumulated depreciation account is the depreciation for the year.

Answer the following five questions pertaining to the OG Corporation and be specific.

1. Prepare a common size vertical analysis of OGs balance sheet in good form. Round percentages to one decimal place. (5 points)
2. Prepare a common size vertical analysis of OGs income statement and reconcile the retained earnings account. Round percentages to one decimal place. (5 points)
3. Prepare the current year statement of cash flows for OG Corporation using the indirect method and reconcile the cash account. (5 points)
4. Based on the financial statements prepared in questions (1) and (2), calculate the efficiency ratios, liquidity ratios, leverage ratios, and profitability ratios for OG Corporation for this year. Where data is available, also calculate ratios for last year. Use a 360-day year. All sales are on credit to business customers. Assume an income tax rate of 30 percent. (7 points) Based upon your answers to parts (1) through (4) would you provide a credit line to this company? Support your decision by reference .