Financial trend Analysis:Directly analyze the firms financial statements as presented in the Exhibits.

Calculate liquidity ratios of the firm for the prior year and current year: current ratio, inventory turnover, and the accounts receivable turnover (for denominator of turnover ratios, use the year presented).Show your calculations and interpret the trend.What conclusions do you draw from this analysis?

Calculate the following solvency ratios of the firm for the prior year and current year: debt to equity and times interest earned.Show your calculations and interpret the trend.What conclusions do you draw from this analysis?

Calculate the following profitability ratios of the firm for the prior year and current year: gross margin, net profit margin, return on assets, and return on equity (for the denominator of the return ratios, use the year presented).Show your calculations and interpret the trend.What conclusions do you draw from this analysis?

Felicia & Fred							Felicia & Fred
Balance Sheets							Statement of Cash Flows
December 31, 2015 and 2014							For the Period Ended December 31, 2015
								000s
							Cash Flows from Operating Activities:
	000s	000s					Net Income	52,500
Assets	2015	2014					Adjustments to reconcile net income to net cash provided by operating activities
Cash	12,000	11,400					Depreciation Expense	55,700
Accounts Receivable	4,700	4,600					Increase in accounts receivable	(100)
Inventory	24,200	13,000					Increase in inventory	(11,200)
Total Current Assets	40,900	29,000					Decrease in salaries payable	(4,200)
							Increase in interest payable	3,000
Land	50,000	40,000					Decrease in taxes payable	(11,200)
Building & Equipment	600,000	600,000					Increase in Short Term notes Payable	24,000
Less: Accumulated Depreciation - Building & Equipment	(375,700)	(320,000)					Increase in accounts payable	2,200
Total Long Term Assets	274,300	320,000					Net Cash Flow from Operating Activities		110,700
Total Assets	315,200	349,000
							Cash Flows from Investing Activities:
Liabilities and Stockholders' Equity							Cash paid to purchase land	(10,000)
							Net Cash Flow from Investing Activities		(10,000)
Accounts Payable	9,200	7,000
Salaries Payable	0	4,200					Cash Flows From Financing Activities:
Interest Payable	3,000	0
Short Term Notes Payable	24,000	0					Cash paid for mortgage	(90,100)
Taxes Payable	0	11,200					Cash paid for dividends	(10,000)
Total Current Liabilities	36,200	22,400					Net Cash Flow from Financing Activities		(100,100)
Mortgate Payable	109,900	200,000					Net Increase in Cash		600
Total Long Term Liabilities	109,900	200,000					Plus: Cash Balance at December 31, 2013		11,400
							Cash Balance at December 31, 2014		12,000
Common Stock	120,000	120,000
Retained Earnings	49,100	6,600
Total Stockholders' Equity	169,100	126,600
Total Liabilities and Stockholders' Equity	315,200	349,000
Felicia & Fred
Income Statements
For the Periods Ended December 31, 2015 and 2014	000s	000s
	2015	2014
Revenue:	975,000	950,000
Less: Cost of Goods Sold	(723,600)	(749,000)
Less: Depreciation Expense	(55,700)	(52,000)
Gross Margin	195,700	149,000
Selling, General & Administrative Expenses	(58,200)	(64,000)
Income Before Interest & Taxes	137,500	85,000
Interest Expense	(15,000)	(12,000)
Income Before Taxes	122,500	73,000
Income Taxes	(70,000)	(60,000)
Net Income	52,500	13,000