Interpret and find problematic areas/ areas to improve on balance sheet/cashflow statement

$000s 0 730,118 0 0 240,000 0 9,000 0 14,686 0 BALANCE SHEET ASSETS Cash On Hand Accounts Receivable (see Note 1) Footwear Inventories Total Current Assets Net Investment in Facilities and Equipment Construction Work In Progress (for new space) Production Improvement Options On Order Total Fixed Assets (see Note 2) Total Assets LIABILITIES Accounts Payable (see Note 3) 1-Year Bank Loan Payable (see Note 4) Current Portion of Long-Term Bank Loans (see Note 5) Overdraft Loan Payable (see Note 6) Total Current Liabilities Long Term Bank Loans Outstanding (see Note 7) Total Liabilities SHAREHOLDER EQUITY Beginning Balance in Y12 Common Stock (see Note 8) 19.800 0 Additional Capital (see Note 9) 104.140 0 Retained Earnings (see Note 10) 150.432 63,308 Total Shareholder Equity 274,372 63,308 Return On Average Shareholder Equity (see Note 11) 993,804 $000s $000s 0 132,669 83,162 215,831 385,814 18,000 4,800 408.614 624,445 $000s 32,079 0 24,000 14,686 70,765 216,000 286,765 $000s 19,800 104,140 213,740 337,680 20.7% CASH FLOW STATEMENT CASH AVAILABLE IN YEAR 12 Beginning Cash Balance (carried over from prior year) Cash Receipts from Footwear Sales (see Note 1) Inflows Bank Loans 1-Year Loan 5-Year Loan 10-Year Loan Stock Issue (0 shares issued) Sale of Production Equipment Interest Income on Y11 Cash Balance Loan to Cover Overdraft (1-year loan@7.5%) Cash Refund (awarded by instructor) Total Cash Available from All Sources CASH OUTLAYS IN YEAR 12 Cash Payments to Materials Suppliers (see Note 2) Outlays Production Expenses (excluding depreciation-see Note 3) Distribution and Warehouse Expenses Marketing and Administrative Expenses Capital Facility Expension (new space) Outlays Equipment Purchases Production Imp. Options Energy Efficiency Initiatives Bank Loan 1-Year Loan Repayment 5-Year Loans (see Note 4) 10-Year Loans Interest Bank Payments Y11 Overdraft Loan Stock Repurchase (0 shares repurchased) Income Payments Dividend Payments to Shareholders Charitable Contributions Cash Fine (assessed by instructor) Total Cash Outlays Net Cash Balance (at the end of Year 12) 126,441 222,891 105,693 155,899 18,000 60,000 4.800 Change 5,625 42,953 205,000 15,375 3,995 0 27,132 0 0 0 Note 1: Of the $530,677 of wholesale and private-label net revenues reported on the Y12 income statement, 75% was collected in Y12 and 25% will be collected in Y13. Note 2: For more details on fixed asset investment, see the Facilities and Equipment report (page 1 of these Company Operating Reports). Note 3: Of the $128,317 of materials used for footwear production in Year 12, 75% was paid for in Year 12 and 25% will be paid for in Year 13. Note 4: The company's Year 12 interest rate for a 1-year bank loan was 5.0%. 993,804 0 Note 1: This item consists of all internet revenues recorded in Y12, 75% of wholesale and private-label revenues recorded in Y12, and accounts receivable from Y11 sales. Note 2: This item consists of 75% of the cost of Y12 production materials and 25% of Y11 production materials costs due to a 3-month lag in payments to materials suppliers. Note 3: This item includes all Y12 production-related expenses (adjusted for exchange rate cost impacts) except for depreciation (which is a non-cash accounting charge). Note 4: All 1-year loans (including overdraft loans) received in Year 11 were repaid in full in Year 12. Interest on all 1-year loans received in Year 11 was also paid in Year 12. 0 0 0 0 0 2 5-yr SELECTED FINANCIAL STATISTICS Note 5: This item represents the principal portion of all outstanding 5-year and 10-year bank loans due to be repaid in the upcoming year (Year 13). Note 6: Loans for overdrafts are incurred automatically to prevent a negative year-end cash balance at an interest rate that is 2.0% higher than the company's 1-year loan rate. Note 7: Long-term bank loans outstanding: Out- Annual Year 13 Loan Initial Original Interest standing Principal Interest Number Year Principal Rate Term Principal Payment Payable 1 Y4 60,000 8.2% 10-yr 6,000 Y9 99,000 7.7% 10-yr 9,900 3 Y11 205,000 7.5% 41,000 0 4 Y12 240,000 6.8% 10-yr 240,000 24,000 16,320 5 6 7 8 9 10 11 12 13 14 15 16 Note 8: There are 19,800k shares of stock issued and outstanding at a par value of $1.00 per share. The authorized maximum number of shares outstanding is 50,000k. Note 9: Additional Capital represents the dollar amount over and above par value that share- holders have paid to purchase new shares of common stock. Note 10: Retained Earnings is a summation of all after-tax profits the company has earned that have not been distributed to shareholders in the form of dividends. Note 11: The formula for Return On Average Shareholder Equity is: After-Tax Profit (Beginning Equity + Ending Equity) = 2 5.67 0.46 1.13 High B- Credit Interest Coverage Ratio (oper. profit = interest exp.) Rating Debt to Assets Ratio (total liabilities - total assets) Measures Default Risk Ratio (cash flow from ops - principal paymts) Risk of Default (see Note 1) Credit Rating (at the end of Year 12) Current Ratio (current assets = current liabilities) Operating Profit Margin (operating profit = net sales revenues) Net Profit Margin (net profit + net sales revenues) Dividend Payout (dividends per share + earnings per share) Cash Flow from Operations (after-tax profit + depreciation) Total Principal Payments ($000s to be paid in Year 12) 3.05 14.6% 8.4% 0.0% 94,843 83,953 Note 1: A default risk ratio of 4.00 or higher results in a Low default risk, 2.00 to 4.00 results in a Meduim default risk, and below 2.00 results in a High default risk. Note: Because demand and sales figures are rounded to the nearest 1000 pairs, minor anomalies in the company's financial statements may occasionally occur. Any rounding inconsistencies that do appear will be smaller than +50 and will likely average-out over time. Such rounding anomalies have no significant impact on company performance