Opossumtown, Inc is a publicly held corporation providing support to the construction industry by selling various types of equipment to contractors. The company began operations in 200 by specializing in equipment related to concrete and masonry applications. Specifically, the company sells concrete and mortar mixers, concrete saws and drills and the related saw blades and drill bits, as well as concrete pouring and finishing equipment. In 20X3, the company implemented a two-step plan to increase their market share of revenue. The company would increase marketing and selling expenses to give the company more name and product recognition in the industry and decrease selling prices across the board on all products to be more competitive. Management believes these two changes will increase sales by 25% in 20X3. These efforts should increase the company's total gross profit by a larger amount than the increase in marketing and selling expenses, thereby increasing both operating and net income. The company also upgraded its technology system by investing in new equipment to gain efficiencies in data processing. Management believes these efficiencies will lower the overall component percentage of general and administrative expenses, which should also increase operating and net income. The company has set a goal of increasing operating income by 6% and net income by 4% in 20X3. Opossumtown, Inc. For the Years En Statement of Retained Earnings Retained earnings, beginning of the year Add: Net income Less: Cash dividends Retained earnings, end of year \begin{tabular}{cc} X3 and 202 & \\ 203 & 202 \\ $155,000 & $103,500 \\ 89,390 & 87,500 \\ $204,390(40,000) & $155,000(36,000) \\ \hline \end{tabular} Opossumtown, Inc. Comparative Balance Sheets December 31, 20X3 and December 31, 20X2 Assets 203 Current Assets: Cash and Cash equivalents Short-term investments (Marketable securities) Accounts receivables (net) Inventories Prepaid expenses (Supplies) Total current assets \begin{tabular}{rr} $50,000 & $40,000 \\ 95,000 & 78,000 \\ 110,000 & 130,000 \\ 190,000 & 195,000 \\ 35,000 & 42,000 \\ \hline$480,000 & $485,000 \\ \hline \end{tabular} Property, Plant, and Equipment: Land Building (net of depreciation) Equipment (net of depreciation) Total property, plant, and equipment \begin{tabular}{rr} $100,000 & $100,000 \\ 390,000 & 400,000 \\ 250,000 & 210,000 \\ \hline$740,000 & $710,000 \\ \hline \end{tabular} Investments: Long-term investments Land held for resale Total investments \begin{tabular}{rr} $200,000 & $160,000 \\ 60,000 & 60,000 \\ $260,000 & $220,000 \\ \hline \end{tabular} A Total Assets $1.480.000$1.415.000 Liabilities Current liabilities: Accounts payable Unearned revenue Income taxes payable Accrued expenses payable Dividends payable Total current liabilities Long-term liabilities: 6% Mortgage payable (due in 10 years) Total Liabilities Opossumtown, Inc. Comparative Statement of Cash Flows For the Years Ended December 31,20X3 and 20X2 Part 1, 15 Points - Prepare a financial analysis of the company by completing the following: 1 - Horizontal analysis through a balance sheet for the last two years with dollar and percentage changes. 2 - Vertical analysis through a common size income statement (component \%) for the last two years. 3 - Ratio analysis for the last two years presented in the form of a two separate data tables by the following categories: The following are industry averages for the above ratios to be used in the data tables: XSee the Financial Statement Analysis Doex (Chapter 16 Materials folder) for an example of the data table
