Dear Accounting Tutors,

Appreciate if you could help me to analyse the attached financial statements and share your thoughts on the financial health of a business. Is this company financially sustainable? If yes or no, how and why?

Yearly Ledger Changes Income Statement Account Year 0 Year 1 Year 2 Account Year 0 Year 1 Year 2 4 Cash 750,000 (727,500) 210,000 Revenue 2,437,500 2,312,500 Inventory 1,187,500 (775,000) COGS 1,687,500 1,950,000 PP&E 500,000 Gross Profit 750,000 362,500 Accounts Payable 700,000 (487,500) Operating Expenses 490,000 440,000 Paid-In Capital 700,000 EBITDA 260,000 (77,500) Revenue 2,437,500 2,312,500 Depreciation Expense 25,000 25,000 COGS 1,687,500 1,950,000 EBIT 235,000 (102,500) Operating Expenses 490,000 440,000 Net Income 235,000 (102,500), Depreciation Expense 25,000 25,000 Accumulated Depreciation (25,000) (25,000) Balance Sheet Cash Flow Statement Account Year 0 Year 1 Year 2 Account Year 0 Year 1 Year 2 V Assets Net Income 235,000 (102,500) Cash 750,000 22,500 232,500 Depreciation 25,000 25,000 Inventory 1,187,500 412,500 Change In Inventory (1,187,500) 775,000 PP &E 500,000 500,000 Change in Accounts Payable 700,000 (487,500) Accumulated Depreciation (25,000) (50,000) Total Operating Cash Flows (227,500) 210,000 Total Assets 750,000 1,685,000 1,095,000 Purchase of PP&E (500,000) Liabilities & Equity Total Investing Cash Flows (500,000) Accounts Payable 700,000 212,500 Paid-In Capital 750,000 750,000 750,000 Increase in Paid-In Capital 750,000 Retained Earnings 235,000 132,500 Total Financing Cash Flows 750,000 Total Liabilities & Assets 750,000 1,685,000 1,095,000 Total Cash Flows 750,000 (727,500) 210,000 Beginning Cash 750,000 22,500 Ending Cash 750,000 22,500 232,500