Instructions: A. Identify ratios and trends, if any, that cause concern about the client's ability to continue as a going concern.

B. Identify ratios and trends, if any, that indicate a high likelihood that the client will continue successfully as a going concern.

C. Assess the client's financial condition as one of the following: High probability that the company will successfully continue in business for at least two years and be able to pay its debts as they become due; Moderate possibility that the company will not successfully continue in businesss for at least two years and will be unable to pay its debts as they become due; High probability that the company will not successfully continue in business for at least two years and will be unable to pay its debts as they become due.

D. Briefly explain the reasoning for your selection.

	Unadjusted			PERCENT	INDUSTRY
LIQUIDITY RATIOS:	12/31/2015	12/31/2014	CHANGE	CHANGE	AVERAGE
Current ratio
current assets / current liabilities	2.31	2.49	-0.18	-7.23%	1.53
Quick ratio
(current assets inventory) / current liabilities	0.42	0.40	0.02	5.00%	0.43
Sales / Receivables
net sales / net ending receivables	16.05	17.78	-1.73	-9.73%	20.29
Number of days sales in A/R
net ending receivables / (net sales / 365)	22.74	20.53	2.21	10.76%	17.99
Inventory turnover
cost of sales / average inventory	1.48	1.39	0.09	6.47%	1.41
PROFITABILITY/PERFORMANCE RATIOS:
Gross profit margin (%)
gross profit / net sales	27.58%	27.69%	-0.11%	-0.40%	23.83%
Income before taxes / Owners equity
net income before taxes / total owners equity	0.10	0.07	0.03	42.86%	0.06
Income before taxes / Total assets
net income before taxes / total assets	0.06	0.04	0.02	50.00%	0.04
Sales / Long-term assets
net sales / net long-term assets	44.29	37.33	6.96	18.64%	19.07
Sales / Total assets
net sales / total assets	1.54	1.49	0.05	3.36%	1.32
Sales / Working capital
net sales / (current assets current liabilities)	2.82	2.59	0.23	8.88%	2.18
SOLVENCY RATIOS:
Owners Equity / Total assets
total stockholders equity / total assets	0.56	0.59	-0.03	-5.08%	0.31
Long-term assets / Owners equity
net long-term assets / total stockholders equity	0.06	0.07	-0.01	-14.29%	0.47
Current liabilities / Owners equity
current liabilities / total stockholders equity	0.75	0.66	0.09	13.64%	1.13
Total Liabilities / Owners equity
total liabilities / total stockholders equity	0.79	0.70	0.09	12.86%	2.03