Download Gillian Pool & Spa - Income Statement.xlsx (12.2 KB) Gillian Pool & Spa Supplies Income Statement 2016 2017 2018 2019 2020 Net Sales 900,000 982,500 1,170,000 1,310,400 1,520,064 COGS 729,000 801,900 962,280 1,100,736 1,305,000 Gross Profit 171,000 180,600 207,720 209,664 215,064 Admin & Selling Expenses 45,000 58,950 64,350 72,072 91,204 Depreciation Expense 37,500 40,000 50,000 50,000 50,000 Miscellaneous Expenses 3,041 3,557 4,680 14,414 22,801 Total Operating Expenses 85,541 102,507 119,030 136,486 164,005 Earnings before Interest & Taxes 85,459 78,093 88,690 73,178 51,059 Interest on ST loans 9,600 9,600 9,600 17,760 17,760 Interest on LT loans 5,400 5,400 5,400 13,500 16,470 Interest on Mortgage 16,000 13,840 12,240 21,440 21,120 Total Interest 31,000 28,840 27,240 52,700 55,350 Earnings Before Taxes 54,459 49,253 61,450 20,478 (4,291) Taxes 21,784 19,701 24,580 8,191 (1,716) Net Income 32,675 29,552 36,870 12,287 (2,575) Dividends Additions to Retained Earnings 32,675 29,552 36,870 12,287 (2,575) Questions: 1. Calculate the increase in Gillian Pool's Net sales and Net Income from 2016 - 2020 in the form of a percentage). For example: if net sales are 100 in 2016 and 105 in 2017, then net sales increased by 5%. Show your work. 2. Calculate the Gross Profit Margin for each year (2016-2020). Show your work. 3. Using the information from questions #1 and #2 above, analyze and explain in your own words how the company sales, income and gross margin is doing over the past 5 years. 4. In order to shed some light on the firm's financial condition, which statements should Denny analyze and what ratios might be valuable to calculate? Please explain why. 5. Calculate the following ratios for each of the 5 years and show your work: 1. Profit Margin = Net Income / Net Sales 2. Return on Assets - Net Income / Total Assets 3. Inventory Turnover - Sales / Inventory 4. Current Ratio - Current Assets / Current Liabilities 5. Debt to Equity - Total Liabilities/Total Equity 3. Using the information from questions #1 and #2 above, analyze and explain in your own words how the company sales, income and gross margin is doing over the past 5 years. 4. In order to shed some light on the firm's financial condition, which statements should Denny analyze and what ratios might be valuable to calculate? Please explain why. 5. Calculate the following ratios for each of the 5 years and show your work: 1. Profit Margin = Net Income / Net Sales 2. Return on Assets - Net Income / Total Assets 3. Inventory Turnover - Sales / Inventory 4. Current Ratio = Current Assets / Current Liabilities 5. Debt to Equity = Total Liabilities/Total Equity 6. Explain in one to two sentences for each ratio, how the company is doing from 2016 to 2020. 7. Based on the ratios and calculations above, what arguments would have to be made to convince the bank that it should grant Gillian Pool & Spa the loan
