Question
Financial Statement Analysis Case Founded in the early 1980s, the Vermont Teddy Bear Co. designs and manufactures American-made teddy bears and markets them primarily as
Financial Statement Analysis Case
Founded in the early 1980s, the Vermont Teddy Bear Co. designs and manufactures American-made teddy bears and markets them primarily as gifts called Bear-Grams or Teddy Bear-Grams. Bear-Grams are personalized teddy bears delivered directly to the recipient for special occasions such as birthdays and anniversaries. The Shelburne, Vermont, companys primary markets are New York, Boston, and Chicago. Sales have jumped dramatically in recent years. Such dramatic growth has significant implications for cash flows. Provided below are the cash flow statements for two recent years for the company.
Current Year | Prior Year | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 17,523 | $ | 838,955 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||
Deferred income taxes | (69,524 | ) | (146,590 | ) | ||||||
Depreciation and amortization | 316,416 | 181,348 | ||||||||
Changes in assets and liabilities: | ||||||||||
Accounts receivable, trade | (38,267 | ) | (25,947 | ) | ||||||
Inventories | (1,599,014 | ) | (1,289,293 | ) | ||||||
Prepaid and other current assets | (444,794 | ) | (113,205 | ) | ||||||
Deposits and other assets | (24,240 | ) | (83,044 | ) | ||||||
Accounts payable | 2,017,059 | (284,567 | ) | |||||||
Accrued expenses | 61,321 | 170,755 | ||||||||
Accrued interest payable, debentures | (58,219 | ) | ||||||||
Other | (8,960 | ) | ||||||||
Income taxes payable | 117,810 | |||||||||
Net cash provided by (used for) operating activities | 236,480 | (700,957 | ) | |||||||
Net cash used for investing activities | (2,102,892 | ) | (4,422,953 | ) | ||||||
Net cash (used for) provided by financing activities | (315,353 | ) | 9,685,435 | |||||||
Net change in cash and cash equivalents | (2,181,765 | ) | 4,561,525 | |||||||
Other information: | ||||||||||
Current liabilities | $ | 4,055,465 | $ | 1,995,600 | ||||||
Total liabilities | 4,620,085 | 2,184,386 | ||||||||
Net sales | 20,560,566 | 17,025,856 |
(b) Evaluate Vermont Teddy Bears liquidity, solvency, and profitability for the current year using cash flow-based ratios. (Round answers to 3 decimal places, e.g. 52.752 or 52.752%.)
Liquidity | : 1 | |||
Solvency | : 1 | |||
Profitability | % |
Financial Statement Analysis Case Founded in the early 1980s, the Vermont Teddy Bear Co. designs and manufactures American-made teddy bears and markets them primarily as gifts called Bear-Grams or Teddy Bear-Grams. Bear-Grams are personalized teddy bears delivered directly to the recipient for special occasions such as birthdays and anniversaries. The Shelburne, Vermont, companys primary markets are New York, Boston, and Chicago. Sales have jumped dramatically in recent years. Such dramatic growth has significant implications for cash flows. Provided below are the cash flow statements for two recent years for the company.
(b) Evaluate Vermont Teddy Bears liquidity, solvency, and profitability for the current year using cash flow-based ratios. (Round answers to 3 decimal places, e.g. 52.752 or 52.752%.)
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