Learning Team Ratio Analysis Memo Resources: Virtual Organizations Access the information contained in your selected organization?s balance sheet and income statement to calculate the following: ? Liquidity ratios o Current ratio o Acid-test, or quick, ratio o Receivables turnover o Inventory turnover ? Profitability ratios o Asset turnover o Profit margin o Return on assets o Return on common stockholders? equity ? Solvency ratios o Debt to total assets o Times interest earned Show your calculations for each ratio. Create a horizontal and vertical analysis for the balance sheet and the income statement. Prepare a 350- to 700-word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions: ? What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company? ? Which users may be interested in each type of ratio? ? What does the collected data reveal about the performance and position of the company?

Income Statement 1/1/2008 12/31/2008 Revenue Direct Expenses Salaries & Wages Vehicle Maintenance Fuel Traps & Chemicals Indirect Expenses Rent Licenses Insurance Administrative Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expense Total Expenses $3,249,580.53 $487,437.08 $64,991.61 $20,449.80 $1,378,203.63 $1,951,082.12 $39,338.17 $2,480.00 $103,613.43 $150,250.00 $16,991.61 $72,014.66 $12,000.00 $7,000.00 $7,800.00 $10,806.40 $116,000.00 $122,138.64 $94,925.75 $50,000.00 $805,358.66 $1,951,082.12 $805,358.66 $2,756,440.78 Net Income $2,756,440.78 $493,139.75 Balance Sheet 12/31/2008 Current Assets Cash Accounts Receivable Inventory Total Current Assets $818,440.68 $812,395.13 $205,934.30 $1,836,770.12 Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets $268,750.00 $110,953.00 ($284,431.95) $95,271.05 Total Assets $1,932,041.17 Liabilities Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities Long-Term Liabilities Total Liabilites Stockholders Equity Common Stock $36,007.33 $270,798.38 $306,805.71 $0.00 $306,805.71 $70,000.00 (1,000,000 authorized shares at $1 par) Retained Earnings Net Income Total Stockholders Equity Total Liabilities & Stockholders Equity $1,062,095.71 $493,139.75 $1,625,235.46 $1,932,041.17 Cash Flow Statement 1/1/2008 12/31/2008 Cash Flow from Operating Activities Net Income Adjustments to Net Income Decrease (Increase) in Accounts Receivables Increase (Decrease) in Liabilities (A/P, Taxes Payable) Net Cash Flow from Operating Activities Cash Flow from Investing Activities Capital Expenditures Depreciation and Amortization Decrease (Increase) in Inventories Net Cash Flow from Investing Activities Cash Flow from Financing Activities Dividends Paid Sale (Repurchase) of Stock Increase (Decrease) in Debt Other cash flows from financing activities Net Cash Flow from Financing Activities $493,139.75 ($1,347.68) ($59,980.58) $431,811.49 $0.00 $94,925.75 $0.00 $94,925.75 $0.00 $0.00 $0.00 $0.00 $0.00 Net Increase (Decrease) in Cash and Cash Equivalents/td> $526,737.24 Cash at beginning of period $291,703.44 Cash at end of period $818,440.68 Balance Sheets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets Total Assets Liabilities Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities LongTerm Liabilities Auto Loans Total LongTerm Liabilities Total Liabilities Stockholders Equity Common Stock (1,000,000 authorized shares at $1 par) Retained Earnings Net Income Total Stockholders Equity Total Liabilities & Stockholders Equity 12/31/2007 $291,703.44 $811,047.45 $205,934.30 $1,308,685.20 $268,750.00 $110,953.00 ($189,506.20) $190,196.80 $1,498,882.00 $42,367.31 $324,418.98 $366,786.29 $0.00 $0.00 $366,786.29 $70,000.00 $293,094.91 $769,000.80 $1,132,095.71 $1,498,882.00 Balance Sheets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets Total Assets Liabilities Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities LongTerm Liabilities Auto Loans Total LongTerm Liabilities Total Liabilities Stockholders Equity Common Stock (1,000,000 authorized shares at $1 par) Retained Earnings Net Income Total Stockholders Equity Total Liabilities & Stockholders Equity 12/31/2006 $32,901.07 $198,281.67 $82,373.72 $313,556.46 $268,750.00 $55,476.50 ($94,580.45) $229,646.05 $543,202.51 $21,482.27 $158,625.33 $180,107.60 $0.00 $0.00 $180,107.60 $70,000.00 ($380.65) $293,475.56 $363,094.91 $543,202.51 Balance Sheets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets Total Assets Liabilities Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities LongTerm Liabilities Auto Loans Total LongTerm Liabilities Total Liabilities Stockholders Equity Common Stock (1,000,000 authorized shares at $1 par) Retained Earnings Net Income Total Stockholders Equity Total Liabilities & Stockholders Equity 12/31/2005 $12,501.92 $36,595.21 $20,593.43 $69,690.56 $43,000.00 $11,095.30 ($13,523.83) $40,571.48 $110,262.04 $40,642.69 $4,991.53 $690.00 $5,681.53 $34,961.16 $34,961.16 $70,000.00 ($380.65) $69,619.35 $110,262.04 Cash Flow Statements Cash Flow from Operating Activities Net Income Adjustments to Net Income Decrease (Increase) in Accounts Receivable Increase (Decrease) in Liabilities (A/P, Taxes Payable) Net CasH Flow from Operating Activites Cash Flow fro Investing Activites Capital Expenditures Depreciation and Amortization Decrease (Increase) in Inventories Net Cash Flow from Investing Activites Cash Flow from Financing Activites Dividends Paid Sale (Repurchase) of Stock Increase (Decrease) in debt Other cash flows from financing activites Net Cash Flow from Financing Activities Cash at beginning of period Cash at end of period 1/1/07 - 12/31/07 1/1/06 - 12/31/06 2/1/05 - 12/31/05 $769,000.80 293,475.56 ($380.65) ($612,765.79) ($161,686.46) ($36,595.21) $186,678.69 $174,426.07 $5,681.53 $342,913.70 $306,215.18 ($31,294.34) ($55,476.50) ($270,131.20) ($54,095.30) $94,925.75 $81,056.63 $13,523.83 ($123,560.58 ($61,780.29) ($20,593.43) ($84,111.33) ($250,854.87) ($61,164.91) $70,000.00 ($34,961.16) $34,961.16 $0.00 ($34,961.16) $104,961.16 $258,802.37 $20,399.15 $32,901.07 $12,501.92 $291,703.44 $12,501.92 Income Statements Revenue Direct Expenses Salaries & Wages Traps & Chemicals Fuel Vehicle Maintenance Indirect Expenses Rent Licenses Interest Expense Insurance Admin. Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expenses Net Income 1/1/2007 - 12/31/2007 $583,954.17 $1,651,100.81 $19,177.32 $77,860.56 $2,332,092.85 $38,192.40 $2,480.00 $0.00 $103,613.43 $133,500.00 $52,860.49 $84,734.61 $12,000.00 $7,000.00 $7,800.00 $9,824.00 $81,510.00 $103,493.45 $94,925.75 $60,000.00 $791,934.13 $3,893,027.78 $2,332,092.85 $791,934.13 $3,124,026.98 $3,124,026.98 $769,000.80 Income Statements 1/1/2006 - 12/31/2006 Revenue Direct Expenses Salaries & Wages Traps & Chemicals Fuel Vehicle Maintenance Indirect Expenses Rent Licenses Interest Expense Insurance Admin. Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expenses Net Income $266,490.56 $769,239.08 $6,605.36 $38,070.08 $1,080,405.08 $18,540.00 $985.00 $3,496.12 $50,662.00 $66,026.00 $58,070.08 $42,964.53 $3,045.00 $5,000.00 $3,900.00 $4,802.48 $97,210.00 $61,865.53 $81,056.63 $32,000.00 $529,623.36 $1,080,405.08 $529,623.36 $1,610,028.44 $1,903,504.00 $1,610,623.44 $293,475.56 Income Statements 2/1/2005 - 12/31/2005 Revenue $439,142.54 Direct Expenses Salaries & Wages Traps & Chemicals Fuel Vehicle Maintenance Indirect Expenses Rent Licenses Interest Expense Insurance Admin. Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expenses Net Income $54,834.19 $177,465.14 $1,523.87 $360.00 $234,183.20 $234,183.20 $17,274.19 $385.00 $2,796.89 $10,000.00 $31,096.00 $4,824.85 $9,983.05 $800.00 $3,000.00 $3,559.50 $92,900.00 $5,196.68 $13,523.83 $10,000.00 $205,339.99 $205,339.99 $439,523.19 $439,523.19 ($380.65) Income Statement 1/1/2008 12/31/2008 Revenue Direct Expenses Salaries & Wages Vehicle Maintenance Fuel Traps & Chemicals Indirect Expenses Rent Licenses Insurance Administrative Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expense Total Expenses $3,249,580.53 $487,437.08 $64,991.61 $20,449.80 $1,378,203.63 $1,951,082.12 $39,338.17 $2,480.00 $103,613.43 $150,250.00 $16,991.61 $72,014.66 $12,000.00 $7,000.00 $7,800.00 $10,806.40 $116,000.00 $122,138.64 $94,925.75 $50,000.00 $805,358.66 $1,951,082.12 $805,358.66 $2,756,440.78 Net Income $2,756,440.78 $493,139.75 Balance Sheet 12/31/2008 Current Assets Cash Accounts Receivable Inventory Total Current Assets $818,440.68 $812,395.13 $205,934.30 $1,836,770.12 Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets $268,750.00 $110,953.00 ($284,431.95) $95,271.05 Total Assets Liabilities $1,932,041.17 Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities Long-Term Liabilities Total Liabilites Stockholders Equity Common Stock $36,007.33 $270,798.38 $306,805.71 $0.00 $306,805.71 $70,000.00 (1,000,000 authorized shares at $1 par) Retained Earnings Net Income Total Stockholders Equity Total Liabilities & Stockholders Equity $1,062,095.71 $493,139.75 $1,625,235.46 $1,932,041.17 Revenue Direct Expenses Salaries & Wages Traps & Chemicals Fuel Vehicle Maintenance Indirect Expenses Rent Licenses Interest Expense Insurance Admin. Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expenses Net Income Revenue Direct Expenses Salaries & Wages Traps & Chemicals Fuel Vehicle Maintenance Indirect Expenses Rent Licenses Interest Expense Insurance Admin. Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expenses Net Income Berry's Bug Blasters 2007 2006 Amount Percentage Amount Percentage $3,893,027.78 100.00% $1,903,504.00 100.00% 2005 Amount Percentage $439,142.54 100.00% $583,954.17 $1,651,100.81 $19,177.32 $77,860.56 $2,332,092.85 15.00% 42.41% 0.49% 2.00% 59.90% $266,490.56 $769,239.08 $6,605.36 $38,070.08 $1,080,405.08 14.00% 40.41% 0.35% 2.00% 56.76% $54,834.19 $177,465.14 $1,523.87 $360.00 $234,183.20 12.49% 40.41% 0.35% 0.08% 53.33% $38,192.40 $2,480.00 $0.00 $103,613.43 $133,500.00 $52,860.49 $84,734.61 $12,000.00 $7,000.00 $7,800.00 $9,824.00 $81,510.00 $103,493.45 $94,925.75 $60,000.00 $791,934.13 0.98% 0.06% 0.00% 2.66% 3.43% 1.36% 2.18% 0.31% 0.18% 0.20% 0.25% 2.09% 2.66% 2.44% 1.54% 20.34% $18,540.00 $985.00 $3,496.12 $50,662.00 $66,026.00 $58,070.08 $42,964.53 $3,045.00 $5,000.00 $3,900.00 $4,802.48 $97,210.00 $61,865.53 $81,056.63 $32,000.00 $529,623.36 0.97% 0.05% 0.18% 2.66% 3.47% 3.05% 2.26% 0.16% 0.26% 0.20% 0.25% 5.11% 3.25% 4.26% 1.68% 27.82% $17,274.19 $385.00 $2,796.89 $10,000.00 $31,096.00 $4,824.85 $9,983.05 $800.00 $3,000.00 $3,559.50 $92,900.00 $5,196.68 $13,523.83 $10,000.00 $205,339.99 3.93% 0.09% 0.64% 2.28% 7.08% 1.10% 2.27% 0.18% 0.00% 0.68% 0.81% 21.15% 1.18% 3.08% 2.28% 46.76% $769,000.80 19.75% $293,475.56 15.42% ($380.65) -0.09% Berry's Bug Blasters 2007 2006 Amount Amount $3,893,027.78 $1,903,504.00 Increase / Decrease Amount Percentage $1,989,523.78 104.52% $583,954.17 $1,651,100.81 $19,177.32 $77,860.56 $2,332,092.85 $266,490.56 $769,239.08 $6,605.36 $38,070.08 $1,080,405.08 $317,463.61 $881,861.73 $12,571.96 $39,790.48 $1,251,687.77 119.13% 114.64% 190.33% 104.52% 115.85% $38,192.40 $2,480.00 $0.00 $103,613.43 $133,500.00 $52,860.49 $84,734.61 $12,000.00 $7,000.00 $7,800.00 $9,824.00 $81,510.00 $103,493.45 $94,925.75 $60,000.00 $791,934.13 $18,540.00 $985.00 $3,496.12 $50,662.00 $66,026.00 $58,070.08 $42,964.53 $3,045.00 $5,000.00 $3,900.00 $4,802.48 $97,210.00 $61,865.53 $81,056.63 $32,000.00 $529,623.36 $19,652.40 $1,495.00 ($3,496.12) $52,951.43 $67,474.00 ($5,209.59) $41,770.08 $8,955.00 $2,000.00 $3,900.00 $5,021.52 ($15,700.00) $41,627.92 $13,869.12 $28,000.00 $262,310.75 106.00% 151.78% -100.00% 104.52% 102.19% -8.97% 97.22% 294.09% 40.00% 100.00% 104.56% -16.15% 67.29% 17.11% 87.50% 49.53% $769,000.80 $293,475.56 $475,525.26 162.03% Berry's Bug Blasters 2007 2006 Amount Percentage Amount Percentage Current Asset Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets Total Assets Liabilities Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities LongTerm Liabilities Auto Loans Total LongTerm Liabilities Total Liabilities Stockholders Equity Common Stock (1,000,000 authorized shares at $1 par Retained Earnings Net Income Total Stockholders Equity Total Liabilities and Total Stockholders Equity $291,703.44 $811,047.45 $205,934.30 $1,308,685.20 19.46% 54.11% 13.74% 87.31% $32,901.07 $198,281.67 $82,373.72 $313,556.47 $268,750.00 $110,953.00 ($189,506.20) $190,196.80 17.93% 7.40% -12.64% 12.69% $1,498,882.00 Current Asset Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets Total Assets Liabilities Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities LongTerm Liabilities Auto Loans Total LongTerm Liabilities Total Liabilities Stockholders Equity Common Stock Retained Earnings Net Income Total Stockholders Equity 2005 Percentage $12,501.92 $36,595.21 $20,593.43 $69,690.56 11.34% 33.19% 18.68% 63.20% $268,750.00 $55,476.60 ($94,580.45) $229,646.15 49.48% $43,000.00 10.21% $11,095.30 -17.41% ($13,523.83) 42.28% $40,571.47 39.00% 10.06% -12.27% 36.80% 100.00% $543,202.62 100.00% $110,262.03 100.00% $42,367.31 $324,418.98 $366,786.29 2.83% 21.64% 24.47% $21,482.27 $158,625.33 $180,107.60 3.95% 29.20% 33.16% $4,991.53 $690.00 $5,681.53 4.53% 0.63% 5.15% $0.00 $0.00 $366,786.29 0.00% 0.00% 24.47% $0.00 $0.00 $180,107.60 0.00% 0.00% 33.16% 34961.16 $34,961.16 $40,642.69 31.71% 31.71% 36.86% $70,000.00 4.67% $293,094.91 $769,000.80 $1,132,095.71 19.55% 51.30% 75.53% $70,000.00 ($380.65) $293,475.56 $363,094.91 12.89% -0.07% 54.03% 66.84% $70,000.00 ($380.65) $69,619.35 63.49% -0.35% 0.00% 63.14% $1,498,882.00 100.00% $543,202.51 100.00% $110,262.04 100.00% Berry's Bug Blasters 2007 2006 Amount Amount 6.06% 36.50% 15.16% 57.72% Amount Increase / Decrease Amount Percentage $291,703.44 $811,047.45 $205,934.30 $1,308,685.20 $32,901.07 $198,281.67 $82,373.72 $313,556.47 $258,802.37 $612,765.78 $123,560.58 $995,128.73 786.61% 309.04% 150.00% 317.37% $268,750.00 $110,953.00 ($189,506.20) $190,196.80 $268,750.00 $55,476.60 ($94,580.45) $229,646.15 $0.00 $55,476.40 ($94,925.75) ($39,449.35) 0.00% 100.00% 100.37% -17.18% $1,498,882.00 $543,202.62 $955,679.38 175.93% $42,367.31 $324,418.98 $366,786.29 $21,482.27 $158,625.33 $180,107.60 $20,885.04 $165,793.65 $186,678.69 97.22% 104.52% 103.65% $0.00 $0.00 $366,786.29 $0.00 $0.00 $180,107.60 $0.00 $0.00 $186,678.69 103.65% (1,000,000 authorized70,000.00 $1 par $70,000.00 $ shares at $0.00 $293,094.91 ($380.65) $293,475.56 $769,000.80 $293,475.56 $475,525.24 $1,132,095.71 $363,094.91 $769,000.80 0.00% -77098.53% 162.03% 211.79% Total Liabilities and Total Stockholders Equity $1,498,882.00 $543,202.51 $955,679.49 175.93% Ratio Formula Computations 2007 2006 Liquidity ratios = Current Assets Current Liabilities = quick Assets Current Liabilities =Net Credit Sales Average net receivable =Cost of goods sold Average Inventory 3.57 3.01 7.71 16.18 1.74 1.28 16.21 20.99 = Net Sales Average Total Assets = Net Income Net Sales Profit margin = Net Income Average Total Assets Return on assets = Net Income Average Common Stock Return on common stockholders' equity holder's Equity 3.81 19.75% 75.32% 5.83 15.42% 89.82% Current ratio Acid-test, or quick, ratio Receivables turnover Inventory turnover Profitability ratios Asset turnover 102.86% 89.82% Solvency ratios Debt to total assets Times interest earned = Total Liabilities Total Assets = (Net Income + Interest Expense + Tax Expense) / Interest Expense 0.24 No Interest Expense 0.33 84.94 The CEO The Balance Sheets of the company for the year 2005, 2006, and has been reviewed. The analysis has shown the following results: The revenue has increased from 2005 to 2006 and from 2006 to 2007. The net income has shown heavy increase. In 2006 there was a loss of 0.09%, has increased to 15.42% profit in 2006 and further increase to 19.75% in 2007. Current Assets have increased from 63.3% in 2006 to 87.31% in 2007, of total assets. It shows the slid liquid position of the company. This has further proved by current ratio which has increased from 1.74 in 2006 to 3.57 in 2007. Similarly Acid test ratio has also increased from 1.28 in 2006 to 3.01 in 2007 The profit margin ratio has increase from 15.42% in 2006 to 19.75% in 2007. Hence this indicates that the company is growing and increasing its bottom line. The Company has improved its Debt to total assets. In 2006 the debt to total assets ratio was 0.33 which has come down to 0.24. Hence the company has reduced its dependence on outsider's funds. Times interest earned has also improved. The company has NIL interest expense in 2007. This is the improvement in company's ability to repay its loans. However the company has come down in the following areas: Assets turnover ratio has come down from 5.83 in 2006 to 3.81 in 2007. Return on Assets has come down from 89.82% to 75.32%. The above ratios indicates that the company has increased the Assets, but have not been able to generate the sales / net income in that proportion. Income Statement 1/1/2008 12/31/2008 Revenue Direct Expenses Salaries & Wages Vehicle Maintenance Fuel Traps & Chemicals Indirect Expenses Rent Licenses Insurance Administrative Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expense Total Expenses $3,249,580.53 $487,437.08 $64,991.61 $20,449.80 $1,378,203.63 $1,951,082.12 $39,338.17 $2,480.00 $103,613.43 $150,250.00 $16,991.61 $72,014.66 $12,000.00 $7,000.00 $7,800.00 $10,806.40 $116,000.00 $122,138.64 $94,925.75 $50,000.00 $805,358.66 $1,951,082.12 $805,358.66 $2,756,440.78 Net Income $2,756,440.78 $493,139.75 Balance Sheet 12/31/2008 Current Assets Cash Accounts Receivable Inventory Total Current Assets $818,440.68 $812,395.13 $205,934.30 $1,836,770.12 Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets $268,750.00 $110,953.00 ($284,431.95) $95,271.05 Total Assets Liabilities $1,932,041.17 Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities Long-Term Liabilities Total Liabilites Stockholders Equity Common Stock $36,007.33 $270,798.38 $306,805.71 $0.00 $306,805.71 $70,000.00 (1,000,000 authorized shares at $1 par) Retained Earnings Net Income Total Stockholders Equity Total Liabilities & Stockholders Equity $1,062,095.71 $493,139.75 $1,625,235.46 $1,932,041.17 Income Statement 1/1/2008 12/31/2008 Revenue Direct Expenses Salaries & Wages Vehicle Maintenance Fuel Traps & Chemicals Indirect Expenses Rent Licenses Insurance Administrative Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expense Total Expenses $3,249,580.53 $487,437.08 $64,991.61 $20,449.80 $1,378,203.63 $1,951,082.12 $39,338.17 $2,480.00 $103,613.43 $150,250.00 $16,991.61 $72,014.66 $12,000.00 $7,000.00 $7,800.00 $10,806.40 $116,000.00 $122,138.64 $94,925.75 $50,000.00 $805,358.66 $1,951,082.12 $805,358.66 $2,756,440.78 Net Income $2,756,440.78 $493,139.75 Balance Sheet 12/31/2008 Current Assets Cash Accounts Receivable Inventory Total Current Assets $818,440.68 $812,395.13 $205,934.30 $1,836,770.12 Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets $268,750.00 $110,953.00 ($284,431.95) $95,271.05 Total Assets Liabilities $1,932,041.17 Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities Long-Term Liabilities Total Liabilites Stockholders Equity Common Stock $36,007.33 $270,798.38 $306,805.71 $0.00 $306,805.71 $70,000.00 (1,000,000 authorized shares at $1 par) Retained Earnings Net Income Total Stockholders Equity Total Liabilities & Stockholders Equity $1,062,095.71 $493,139.75 $1,625,235.46 $1,932,041.17 Revenue Direct Expenses Salaries & Wages Traps & Chemicals Fuel Vehicle Maintenance Indirect Expenses Rent Licenses Interest Expense Insurance Admin. Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expenses Net Income Revenue Direct Expenses Salaries & Wages Traps & Chemicals Fuel Vehicle Maintenance Indirect Expenses Rent Licenses Interest Expense Insurance Admin. Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expenses Net Income Berry's Bug Blasters 2007 2006 Amount Percentage Amount Percentage $3,893,027.78 100.00% $1,903,504.00 100.00% 2005 Amount Percentage $439,142.54 100.00% $583,954.17 $1,651,100.81 $19,177.32 $77,860.56 $2,332,092.85 15.00% 42.41% 0.49% 2.00% 59.90% $266,490.56 $769,239.08 $6,605.36 $38,070.08 $1,080,405.08 14.00% 40.41% 0.35% 2.00% 56.76% $54,834.19 $177,465.14 $1,523.87 $360.00 $234,183.20 12.49% 40.41% 0.35% 0.08% 53.33% $38,192.40 $2,480.00 $0.00 $103,613.43 $133,500.00 $52,860.49 $84,734.61 $12,000.00 $7,000.00 $7,800.00 $9,824.00 $81,510.00 $103,493.45 $94,925.75 $60,000.00 $791,934.13 0.98% 0.06% 0.00% 2.66% 3.43% 1.36% 2.18% 0.31% 0.18% 0.20% 0.25% 2.09% 2.66% 2.44% 1.54% 20.34% $18,540.00 $985.00 $3,496.12 $50,662.00 $66,026.00 $58,070.08 $42,964.53 $3,045.00 $5,000.00 $3,900.00 $4,802.48 $97,210.00 $61,865.53 $81,056.63 $32,000.00 $529,623.36 0.97% 0.05% 0.18% 2.66% 3.47% 3.05% 2.26% 0.16% 0.26% 0.20% 0.25% 5.11% 3.25% 4.26% 1.68% 27.82% $17,274.19 $385.00 $2,796.89 $10,000.00 $31,096.00 $4,824.85 $9,983.05 $800.00 $3,000.00 $3,559.50 $92,900.00 $5,196.68 $13,523.83 $10,000.00 $205,339.99 3.93% 0.09% 0.64% 2.28% 7.08% 1.10% 2.27% 0.18% 0.00% 0.68% 0.81% 21.15% 1.18% 3.08% 2.28% 46.76% $769,000.80 19.75% $293,475.56 15.42% ($380.65) -0.09% Berry's Bug Blasters 2007 2006 Amount Amount $3,893,027.78 $1,903,504.00 Increase / Decrease Amount Percentage $1,989,523.78 104.52% $583,954.17 $1,651,100.81 $19,177.32 $77,860.56 $2,332,092.85 $266,490.56 $769,239.08 $6,605.36 $38,070.08 $1,080,405.08 $317,463.61 $881,861.73 $12,571.96 $39,790.48 $1,251,687.77 119.13% 114.64% 190.33% 104.52% 115.85% $38,192.40 $2,480.00 $0.00 $103,613.43 $133,500.00 $52,860.49 $84,734.61 $12,000.00 $7,000.00 $7,800.00 $9,824.00 $81,510.00 $103,493.45 $94,925.75 $60,000.00 $791,934.13 $18,540.00 $985.00 $3,496.12 $50,662.00 $66,026.00 $58,070.08 $42,964.53 $3,045.00 $5,000.00 $3,900.00 $4,802.48 $97,210.00 $61,865.53 $81,056.63 $32,000.00 $529,623.36 $19,652.40 $1,495.00 ($3,496.12) $52,951.43 $67,474.00 ($5,209.59) $41,770.08 $8,955.00 $2,000.00 $3,900.00 $5,021.52 ($15,700.00) $41,627.92 $13,869.12 $28,000.00 $262,310.75 106.00% 151.78% -100.00% 104.52% 102.19% -8.97% 97.22% 294.09% 40.00% 100.00% 104.56% -16.15% 67.29% 17.11% 87.50% 49.53% $769,000.80 $293,475.56 $475,525.26 162.03% Berry's Bug Blasters 2007 2006 Amount Percentage Amount Percentage Current Asset Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets Total Assets Liabilities Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities LongTerm Liabilities Auto Loans Total LongTerm Liabilities Total Liabilities Stockholders Equity Common Stock (1,000,000 authorized shares at $1 par Retained Earnings Net Income Total Stockholders Equity Total Liabilities and Total Stockholders Equity $291,703.44 $811,047.45 $205,934.30 $1,308,685.20 19.46% 54.11% 13.74% 87.31% $32,901.07 $198,281.67 $82,373.72 $313,556.47 $268,750.00 $110,953.00 ($189,506.20) $190,196.80 17.93% 7.40% -12.64% 12.69% $1,498,882.00 Current Asset Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets Total Assets Liabilities Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities LongTerm Liabilities Auto Loans Total LongTerm Liabilities Total Liabilities Stockholders Equity Common Stock Retained Earnings Net Income Total Stockholders Equity 2005 Percentage $12,501.92 $36,595.21 $20,593.43 $69,690.56 11.34% 33.19% 18.68% 63.20% $268,750.00 $55,476.60 ($94,580.45) $229,646.15 49.48% $43,000.00 10.21% $11,095.30 -17.41% ($13,523.83) 42.28% $40,571.47 39.00% 10.06% -12.27% 36.80% 100.00% $543,202.62 100.00% $110,262.03 100.00% $42,367.31 $324,418.98 $366,786.29 2.83% 21.64% 24.47% $21,482.27 $158,625.33 $180,107.60 3.95% 29.20% 33.16% $4,991.53 $690.00 $5,681.53 4.53% 0.63% 5.15% $0.00 $0.00 $366,786.29 0.00% 0.00% 24.47% $0.00 $0.00 $180,107.60 0.00% 0.00% 33.16% 34961.16 $34,961.16 $40,642.69 31.71% 31.71% 36.86% $70,000.00 4.67% $293,094.91 $769,000.80 $1,132,095.71 19.55% 51.30% 75.53% $70,000.00 ($380.65) $293,475.56 $363,094.91 12.89% -0.07% 54.03% 66.84% $70,000.00 ($380.65) $69,619.35 63.49% -0.35% 0.00% 63.14% $1,498,882.00 100.00% $543,202.51 100.00% $110,262.04 100.00% Berry's Bug Blasters 2007 2006 Amount Amount 6.06% 36.50% 15.16% 57.72% Amount Increase / Decrease Amount Percentage $291,703.44 $811,047.45 $205,934.30 $1,308,685.20 $32,901.07 $198,281.67 $82,373.72 $313,556.47 $258,802.37 $612,765.78 $123,560.58 $995,128.73 786.61% 309.04% 150.00% 317.37% $268,750.00 $110,953.00 ($189,506.20) $190,196.80 $268,750.00 $55,476.60 ($94,580.45) $229,646.15 $0.00 $55,476.40 ($94,925.75) ($39,449.35) 0.00% 100.00% 100.37% -17.18% $1,498,882.00 $543,202.62 $955,679.38 175.93% $42,367.31 $324,418.98 $366,786.29 $21,482.27 $158,625.33 $180,107.60 $20,885.04 $165,793.65 $186,678.69 97.22% 104.52% 103.65% $0.00 $0.00 $366,786.29 $0.00 $0.00 $180,107.60 $0.00 $0.00 $186,678.69 103.65% (1,000,000 authorized70,000.00 $1 par $70,000.00 $ shares at $0.00 $293,094.91 ($380.65) $293,475.56 $769,000.80 $293,475.56 $475,525.24 $1,132,095.71 $363,094.91 $769,000.80 0.00% -77098.53% 162.03% 211.79% Total Liabilities and Total Stockholders Equity $1,498,882.00 $543,202.51 $955,679.49 175.93% Ratio Formula Computations 2007 2006 Liquidity ratios = Current Assets Current Liabilities = quick Assets Current Liabilities =Net Credit Sales Average net receivable =Cost of goods sold Average Inventory 3.57 3.01 7.71 16.18 1.74 1.28 16.21 20.99 = Net Sales Average Total Assets = Net Income Net Sales Profit margin = Net Income Average Total Assets Return on assets = Net Income Average Common Stock Return on common stockholders' equity holder's Equity 3.81 19.75% 75.32% 5.83 15.42% 89.82% Current ratio Acid-test, or quick, ratio Receivables turnover Inventory turnover Profitability ratios Asset turnover 102.86% 89.82% Solvency ratios Debt to total assets Times interest earned = Total Liabilities Total Assets = (Net Income + Interest Expense + Tax Expense) / Interest Expense 0.24 No Interest Expense 0.33 84.94 The CEO The Balance Sheets of the company for the year 2005, 2006, and has been reviewed. The analysis has shown the following results: The revenue has increased from 2005 to 2006 and from 2006 to 2007. The net income has shown heavy increase. In 2006 there was a loss of 0.09%, has increased to 15.42% profit in 2006 and further increase to 19.75% in 2007. Current Assets have increased from 63.3% in 2006 to 87.31% in 2007, of total assets. It shows the slid liquid position of the company. This has further proved by current ratio which has increased from 1.74 in 2006 to 3.57 in 2007. Similarly Acid test ratio has also increased from 1.28 in 2006 to 3.01 in 2007 The profit margin ratio has increase from 15.42% in 2006 to 19.75% in 2007. Hence this indicates that the company is growing and increasing its bottom line. The Company has improved its Debt to total assets. In 2006 the debt to total assets ratio was 0.33 which has come down to 0.24. Hence the company has reduced its dependence on outsider's funds. Times interest earned has also improved. The company has NIL interest expense in 2007. This is the improvement in company's ability to repay its loans. However the company has come down in the following areas: Assets turnover ratio has come down from 5.83 in 2006 to 3.81 in 2007. Return on Assets has come down from 89.82% to 75.32%. The above ratios indicates that the company has increased the Assets, but have not been able to generate the sales / net income in that proportion. Income Statement 1/1/2008 12/31/2008 Revenue Direct Expenses Salaries & Wages Vehicle Maintenance Fuel Traps & Chemicals Indirect Expenses Rent Licenses Insurance Administrative Salaries Commissions Payroll Taxes Legal Expenses Accounting Fees Office Supplies Utilities Advertising Expenses Bad Debts Depreciation Expense Misc. Expense Total Expenses $3,249,580.53 $487,437.08 $64,991.61 $20,449.80 $1,378,203.63 $1,951,082.12 $39,338.17 $2,480.00 $103,613.43 $150,250.00 $16,991.61 $72,014.66 $12,000.00 $7,000.00 $7,800.00 $10,806.40 $116,000.00 $122,138.64 $94,925.75 $50,000.00 $805,358.66 $1,951,082.12 $805,358.66 $2,756,440.78 Net Income $2,756,440.78 $493,139.75 Balance Sheet 12/31/2008 Current Assets Cash Accounts Receivable Inventory Total Current Assets $818,440.68 $812,395.13 $205,934.30 $1,836,770.12 Fixed Assets Vehicles Tools Less Accumulated Depreciation Total Fixed Assets $268,750.00 $110,953.00 ($284,431.95) $95,271.05 Total Assets Liabilities $1,932,041.17 Current Liabilities Accrued Payroll Taxes Accounts Payable Total Current Liabilities Long-Term Liabilities Total Liabilites Stockholders Equity Common Stock $36,007.33 $270,798.38 $306,805.71 $0.00 $306,805.71 $70,000.00 (1,000,000 authorized shares at $1 par) Retained Earnings Net Income Total Stockholders Equity Total Liabilities & Stockholders Equity $1,062,095.71 $493,139.75 $1,625,235.46 $1,932,041.17