Opossumtown, Inc. is a farm equipment retailer with a history of inconsistent financial performance. Below are comparative financial statements for the last two years.

Opossumtown, Inc.

Income Statement

For the Years Ended July 31, 20X2 and July 31, 20X1

20X2 20X1

Sales		$900,000		$750,000
Cost of goods sold		530,000		420,000
Gross profit		$370,000		330,000
Operating expenses:
Selling expenses Commissions Advertising Travel Total selling expenses General and administrative expenses Salaries Rent Utilities Supplies Total general and admin. expenses Total operating expenses Operating income Non-operating Items: increase/(decrease) Add: Interest/dividend revenue Deduct: Interest expense Total net non-operating items Income before income taxes Income tax expense Net income	60,000 52,000 20,000 132,000 70,000 22,000 12,000 7,000 111,000 20,800 32,000	243,000 127,000 (11,200) 115,800 40,800 $ 75,000	40,000 22,000 13,000 75,000 60,000 20,000 10,000 5,000 95,000 16,000 36,000	170,000 160,000 (20,000) 140,000 50,000 $ 90,000

Opossumtown, Inc.

Comparative Balance Sheets

July 31, 20X2 and July 31, 20X1

Assets	20X2	20X1
Current Assets:
Cash and Cash equivalents	$ 60,000	$ 50,000
Short-term investments (Marketable securities)	115,000	88,000
Accounts receivables (net)	120,000	140,000
Inventories	180,000	200,000
Prepaid expenses (Supplies)	25,000	22,000
Total current assets	$ 500,000	$ 500,000
Property, Plant, and Equipment:
Land	$ 260,000	$ 260,000
Building	500,000	500,000
Equipment	240,000	170,000
Total property, plant, and equipment	$1,000,000	$ 930,000
Total Assets	$1,500,000	$1,430,000
Liabilities
Current liabilities:
Accounts payable	$ 150,000	$ 204,000
Income taxes payable	10,000	10,000
Dividends payable	40,000	36,000
Total current liabilities	$ 200,000	$ 250,000
Long-term liabilities:
7% Mortgage payable (due in 10 years)	$ 400,000	$ 465,000
Total Liabilities	$ 600,000	$ 715,000
Stockholders Equity
Capital stock, $100 par value	$ 710,000	$ 560,000
Retained earnings	190,000	155,000
Total Stockholders Equity	$ 900,000	$ 715,000
Total Liabilities and Stockholders Equity	$1,500,000	$1,430,000

You have gathered the following industry average financial data which is a composite of the performance of competitors within the industry that Opossumtown Inc. operates:

Balance Sheet Ratios Income Statement Ratios

Data Title	Industry Average		Data Title	Industry Average
Quick ratio	1.3 to 1		Gross Profit Margin	42.8%
Current ratio	2.2 to 1		Operating Margin	23.6%
Debt Ratio	42.5%		Profit Margin	10.2%
Average collection period	40 days		Days to sell inventory	155 days

Additionally, you have learned that the company sells its merchandise on net 45 days credit.

Required: Must be presented as a Microsoft Word or Excel document using the assignment link in BB. Computations can be handwritten and submitted by email if you dont want to use the assignment link.

Part 1 20 Points - Prepare 2 separate data tables, one table analyzing the income statement and a second table that analyzes the balance sheet for Opossumtown Inc. for the last two years.

Use the following format and provide a heading for each separate data table:

Data Title 20X2 20X1 Industry Average*

* Use the industry average data presented above.

Your data titles are based on the 8 industry averages provided in the opening paragraph. Round all computations, except days, to the tenths decimal place. Show supporting computations of your data analysis on a separate sheet. For the inventory and accounts receivable turnover rate computations (used to compute the days), use the year-end balances of inventory and accounts receivable respectively, in place of the average balances.