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OG Corporations balance sheet and income statement is listed below. Balance Sheet This Year Last Year Cash 50,000 40,000 Accounts receivable 80,000 60,000 Inventories 180,000

OG Corporations balance sheet and income statement is listed below.

Balance Sheet This Year Last Year

Cash

50,000

40,000

Accounts receivable

80,000

60,000

Inventories

180,000

110,000

Plant & equipment

300,000

260,000

Less accumulated depreciation

-40,000

-20,000

Total assets

570,000

450,000

Accounts payable

100,000

150,000

Accrued liabilities

70,000

50,000

Mortgage payable

80,000

Common stock

130,000

90,000

Retained earnings

190,000

160,000

Total liabilities and equity

570,000

450,000

Income Statement This Year Last Year

Net Sales

680,000

600,000

Cost of goods sold

410,000

330,000

Gross profit

270,000

270,000

Operating expenses

190,000

192,000

Operating income

80,000

78,000

Interest expense

7,000

2,000

Profit before taxes

73,000

76,000

Taxes

22,000

22,800

Net income

51,000

53,200

Other data:

  • Cash dividends paid this year were $21,000.
  • The change in accumulated depreciation account is the depreciation for the year.

Answer the following five questions pertaining to the OG Corporation and be specific.

  1. Prepare a common size vertical analysis of OGs balance sheet in good form. Round percentages to one decimal place. (5 points)

  1. Prepare a common size vertical analysis of OGs income statement and reconcile the retained earnings account. Round percentages to one decimal place. (5 points)

  1. Prepare the current year statement of cash flows for OG Corporation using the indirect method and reconcile the cash account. (5 points)

  1. Based on the financial statements prepared in questions (1) and (2), calculate the efficiency ratios, liquidity ratios, leverage ratios, and profitability ratios for OG Corporation for this year. Where data is available, also calculate ratios for last year. Use a 360-day year. All sales are on credit to business customers. Assume an income tax rate of 30 percent. (7 points) Based upon your answers to parts (1) through (4) would you provide a credit line to this company? Support your decision by refere

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