Part 11 Using the Score Financial Projections Template (See Below) analyze the pictures in their entirety for any aspects that may not be obvious to the common financial statement user. Explain each of these areas of possible confusion. Please label each section of confusion by the highlighted label on each excel sheet. The spreadsheet did not show up on word like I wanted it to. If the person looking at this would like a copy of the excel spreadsheet I would be happy to send it to them.

Financial Ratios - Year 1
Prepared By:	Company Name:
Owner	Company 1
						This sheet shows some common financial ratios. There is a column where you can enter industry norms. To get these, contact your local library or bank to see if they have copies of the Risk Management Association (RMA) Annual Statement or refer to industry publications and trade magazines. Speak with your mentor to ensure you are using the appropriate resources.
Ratios	Year One	Year Two	Year Three	Industry Norms	Notes
Liquidity
Current Ratio	-2.8	-3.9	-4.9
Quick Ratio	-2.6	-3.6	-4.6
Safety
Debt to Equity Ratio	-0.3	-0.2	-0.2
Debt-Service Coverage Ratio - DSCR	-4.1	-1.5	-1.5
Profitability
Sales Growth	0.0%	10.0%	10.0%
COGS to Sales	39.4%	39.4%	39.4%
Gross Profit Margin	60.6%	60.6%	60.6%
SG&A to Sales	7.6%	7.9%	9.1%
Net Profit Margin	141.6%	47.7%	46.9%
Return on Equity (ROE)	101.7%	28.5%	24.3%
Return on Assets	135.8%	35.6%	29.1%
Owner's Compensation to Sales	2.2%	2.4%	2.9%
Efficiency
Days in Receivables	35.1	31.9	29.0
Accounts Receivable Turnover	10.2	11.3	12.4
Days in Inventory	33.9	62.4	90.2
Inventory Turnover	10.6	5.9	4.0
Sales to Total Assets	1.0	0.7	0.6

Diagnostic Tools - Year 1
Prepared By:	Company Name:
Owner	Company 1
General Financing Assumptions	Value	Findings		This sheet performs a few tests on your numbers to see if they seem within certain reasonable ranges. Remember, no computer can tell whether your projections are truly well-constructed, only a human can do that. But these tests can at least look for values that are critically out of range.
Owner's Cash Injection into the Business	52.3%	Owner's injection is reasonable
Cash Request as percent of Total Required Funds	0.0%	Cash request seems reasonable with respect to total request
Loan Assumptions	Value	Findings
Commercial Loan Interest rate	9.0%	Interest rate seems reasonable
Commercial Loan Term in Months	84	Loan term seems within range for this type of loan
Commercial Mortgage Interest rate	9.0%	Interest rate seems reasonable
Commercial Mortgage Term in Months	240	Loan term seems within range for this type of loan
Debt-Service Coverage	-408.0%	Calculated loan payments relative to operating profit seem reasonable
Income Statement	Value	Findings
Gross Margin as a Percent of Sales	60.6%	Gross margin percentage seems reasonable
Owner's Compensation Lower Limit Check	$ 35,360	An owner's compensation amount has been established
Owner's Compensation Upper Limit Check	1.6%	Owner's compensation seems reasonable
Advertising Expense Levels as a Percent of Sales	0.3%	Advertising as a percent of sales may be too low
Profitability Levels	$ 2,260,940	The business is showing a profit
Profitability as a Percent of Sales	141.6%	The projection may be too aggressive in stating profitability
Cash Flow Statement	Value	Findings
Desired Operating cash Flow Levels	$ 8,014	The financial projection provides the desired level of cash flow
Line of Credit Drawdowns	$ 8,014	The business will need at least this level of a line of credit
Accounts Receivable Ratio to Sales	9.8%	Accounts receivable amount as a percent of sales seems reasonable
Balance Sheet	Value	Findings
Does the Year 1 Balance Sheet Balance?	$ -	The balance sheet does balance
Debt to Equity Ratio	-25.1%	Very comfortable
Breakeven Analysis	Value	Findings
Do Sales Exceed the Breakeven Level?	$ 4,007,163	The sales projection exceeds the projected break-even sales level