Part III

Financial Statement Analysis

a. Within this workbook there is a worksheet labeled "Adjusted Trial Balances". Within that worksheet you will find fully completed trial balances for three years. Also within this workbook you will find worksheets for comparative income statements and comparative balance sheets. Using the trial balances and comparative financial statements you need to calculate a variety of ratios. You will find the required ratios in the worksheet labeled "Ratios Historical". Complete all the required ratios. You MUST use formulas and/or linking to compute your ratios. You can not simply hard key the answers. You must reference the appropriate data from the trial balances and comparative financial statements.

b. After completing all of your ratio calcualtions, analyze the results in comparison to prior years and industry averages. Write a business memo explaining your findings. Your memo should be writtin in Word and it should follow normal business memo conventions. There is not a length requirement, however you will be graded upon the substance of your analysis.

		December 31, 2016		December 31, 2015		December 31, 2014		December 31, 2013		May 31, 2016
		Adjusted		Adjusted		Adjusted		Adjusted		Adjusted
		Trial Balance		Trial Balance		Trial Balance		Trial Balance		Trial Balance
Acct. No.	Account Title	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.
100	Cash	309,700	0	311,640	0	342,804	0	373,656	0	75,000
102	Accounts Receivable	964,500	0	846,728	0	931,401	0	1,015,227	0	490,000
103	Allowance for Doubtful Accounts	0	32,500	0	17,808	0	19,589	0	21,352		15,000
104	Merchandise Inventory	617,556	0	637,967	0	701,764	0	764,923	0	334,000
105	Office Supplies	17,940	0	2,374	0	2,612	0	2,847	0	2,000
106	Prepaid Insurance	31,380	0	16,621	0	18,283	0	20,111	0	14,000
140	Land	1,827,900	0	2,000,600	0	2,000,600	0	2,000,600	0	2,000,600
145	Building	1,515,700		1,500,000		1,500,000		1,500,000		1,500,000
146	Accumulated Depreciation - Building		1,515,700		1,500,000		1,500,000		1,500,000		1,500,000
151	Equipment & Furniture - Warehouse	26,900	0	11,872	0	13,059	0	14,235	0	10,000
152	Accumulated Depreciation - Equip & Furn. - Warehouse	0	17,828	0	2,256	0	2,481	0	2,705		1,900
153	Equipment & Furniture - Office	25,220	0	10,091	0	11,100	0	12,099	0	8,500
154	Accumulated Depreciation - Equip & Furn. - Office	0	17,492	0	1,900	0	2,089	0	2,278		1,600
201	Accounts Payable	0	828,132	0	861,178	0	947,296	0	978,338		948,600
202	Wages Payable	0	0	0	0	0	0	0	0		0
203	Interest Payable	0	0	0	0	0	0	0	0		0
204	Dividends Payable	0	0	0	0	0	0	0	0		0
205	Unearned Rent	0	0	0	0	0	0	0	0		0
250	Notes Payable	0	0	0	0	0	0	0	0		0
251	Bonds Payable	0	0	0	0	0	0	0	0		0
252	Mortgage (Warehouse) Payable	0	139,700	0	131,440	0	144,584	0	157,597		200,000
300	Common Stock, $1 Par, 100,000 Authorized; 60,000 shares Issued/Outstanding	0	80,700	0	65,000	0	65,000	0	65,000		60,000
301	Paid In Capital - Excess of Par	0	1,560,700	0	1,545,000	0	1,545,000	0	1,545,000		1,341,000
330	Retained Earnings	0	1,182,444		1,065,744		956,030		1,238,479		366,000
340	Treasury Stock	0	0	0	0	0	0	0	0	0
500	Sales	0	8,865,700	0	8,874,000	0	9,051,480	0	9,141,995		725,000
510	Sales Discounts	0	0	0	0	0	0	0	0	0
511	Sales Returns & Allowances	0	0	0	0	0	0	0	0	0
600	Cost of Goods Sold	7,671,700	0	7,661,551	0	7,625,748	0	7,852,006	0	638,000
700	Wage Expense (hourly workers)	135,700	0	122,400	0	124,848	0	126,096	0	10,000
701	Salaries Expense (Exempt Staff)	375,700	0	367,200	0	374,544	0	378,289	0	30,000
702	Marketing Expense	303,700	0	293,760	0	299,635	0	302,632	0	24,000
703	Travel and Entertainment Expense	43,300	0	28,152	0	28,715	0	29,002	0	2,300
704	Bad Debt Expense	0	0	0	0	0	0	0	0	0
705	Property Tax Expense	0	0	0	0	0	0	0	0	0
706	Office Maintenance & Repair Expense	21,700	0	6,120	0	6,242	0	6,305	0	500
707	Legal Expenses	214,300	0	202,572	0	206,623	0	208,690	0	16,550
708	Insurance Expense	39,700	0	24,480	0	24,970	0	25,219	0	2,000
709	Utilities Expense	27,700	0	12,240	0	12,485	0	12,610	0	1,000
710	Office Supplies Expense	19,180	0	3,550	0	3,621	0	3,657	0	290
711	Telecommunications Expense	16,360	0	673	0	687	0	694	0	55
712	Depreciation Expense - Equip & Furniture - Warehouse	17,680	0	2,020	0	2,060	0	2,081	0	165
713	Depreciation Expense - Equip & Furniture - Office	17,380	0	1,714	0	1,748	0	1,765	0	140
800	Rent Income	0	0	0	0	0	0	0	0	0
900	Interest Expense	0	0	0	0	0	0	0	0	0
	Total	14,240,896	14,240,896	14,064,325	14,064,325	14,233,549	14,233,549	14,652,743	14,652,743	5,159,100	5,159,100
Variance		0		0		0		0		0

Auto Zone
Income Statement
	12/31/16		12/31/15		12/31/14		12/31/13		5/31/16
Sales Revenue
Sales	8,865,700		8,874,000		9,051,480		9,141,995		725,000
Less: Sales Returns & Allowances	0		0		0		0		0
Sales Discounts	0		0		0		0		0
Net Sales	8,865,700		8,874,000		9,051,480		9,141,995		725,000
Cost of Goods Sold	7,671,700		7,661,551		7,625,748		7,852,006		638,000
Gross Profit	1,194,000		1,212,449		1,425,732		1,289,989		87,000
Operating Expenses
Wage Expense (hourly workers)	135,700		122,400		124,848		126,096		10,000
Salaries Expense (Exempt Staff)	375,700		367,200		374,544		378,289		30,000
Marketing Expense	303,700		293,760		299,635		302,632		24,000
Travel and Entertainment Expense	43,300		28,152		28,715		29,002		2,300
Bad Debt Expense	0		0		0		0		0
Property Tax Expense	0		0		0		0		0
Office Maintenance & Repair Expense	21,700		6,120		6,242		6,305		500
Legal Expenses	214,300		202,572		206,623		208,690		16,550
Insurance Expense	39,700		24,480		24,970		25,219		2,000
Utilities Expense	27,700		12,240		12,485		12,610		1,000
Office Supplies Expense	19,180		3,550		3,621		3,657		290
Telecommunications Expense	16,360		673		687		694		55
Depreciation Expense - Equip & Furniture - Warehouse	17,680		2,020		2,060		2,081		165
Depreciation Expense - Equip & Furniture - Office	17,380		1,714		1,748		1,765		140
Total Operating Expenses	1,232,400		1,064,880		1,086,178		1,097,039		87,000
Operating Income	-38,400		147,569		339,554		192,950		0
Other Revenues & Gains
Rent Income	0		0		0		0		0
	0		0		0		0		0
Other Expenses & Losses
Interest Expense	0		0		0		0		0
	0		0		0		0		0
Net Income	-38,400		147,569		339,554		192,950		0
Common Dividends	19,200		16,130		15,000		1,600
Weighted Average Common Shares	65,000		65,000		65,000		62,500
Market Price per Common Share	35.00		34.00		31.00		34.00

Auto Zone
Balance Sheet
	12/31/16	1/0/00	12/31/15	1/0/00	12/31/14	1/0/00	12/31/13	1/0/00	5/31/16
ASSETS
Current Assets
Cash	309,700		311,640		342,804		373,656		75,000
Accounts Receivable	964,500		846,728		931,401		1,015,227		490,000
Less: Allowance for Doubtful Accounts	32,500		17,808		19,589		21,352		15,000
Net Accounts Receivable	932,000		828,920		911,812		993,875		475,000
Merchandise Inventory	617,556		637,967		701,764		764,923		334,000
Office Supplies	17,940		2,374		2,612		2,847		2,000
Prepaid Insurance	31,380		16,621		18,283		20,111		14,000
Total Current Assets	1,908,576		1,797,523		1,977,275		2,155,412		900,000
Long-Term Assets
Land	1,827,900		2,000,600		2,000,600		2,000,600		2,000,600
Equipment & Furniture - Warehouse	26,900		11,872		13,059		14,235		10,000
Accumulated Depreciation - Equip & Furn. - Warehouse	17,828		2,256		2,481		2,705		1,900
Book Value: Equipment & Furniture - Warehouse	9,072		9,616		10,578		11,530		8,100
Equipment & Furniture - Office	25,220		10,091		11,100		12,099		8,500
Accumulated Depreciation - Equip & Furn. - Office	17,492		1,900		2,089		2,278		1,600
Book Value: Equipment & Furniture - Office	7,728		8,192		9,011		9,822		6,900
Total Long-Term Assets	1,844,700		2,018,408		2,020,189		2,021,952		2,015,600
TOTAL ASSETS	3,753,276		3,815,931		3,997,464		4,177,364		2,915,600
LIABILITIES
Current Liabilities
Accounts Payable	828,132		861,178		947,296		978,338		948,600
Wages Payable	0		0		0		0		0
Interest Payable	0		0		0		0		0
Dividends Payable	0		0		0		0		0
Unearned Rent	0		0		0		0		0
Total Current Liabilities	828,132		861,178		947,296		978,338		948,600
Long-Term Liabilities
Notes Payable	0		0		0		0		0
Bonds Payable	0		0		0		0		0
Mortgage (Warehouse) Payable	139,700		131,440		144,584		157,597		200,000
Total Long-Term Liablities	139,700		131,440		144,584		157,597		200,000
TOTAL LIABILITIES	967,832		992,618		1,091,880		1,135,935		1,148,600
STOCKHOLDER'S EQUITY
Paid-in Capital
Capital Stock	80,700		65,000		65,000		65,000		60,000
Additional Paid-in Capital	1,560,700		1,545,000		1,545,000		1,545,000		1,341,000
Retained Earnings	1,144,044		1,213,313		1,295,584		1,431,429		366,000
Total Paid-in Capital & Retained Earnings	2,785,444		2,823,313		2,905,584		3,041,429		1,767,000
TOTAL LIABILITIES & CAPITAL	3,753,276		3,815,931		3,997,464		4,177,364		2,915,600
TOTAL ASSETS	3753276		3815930.56		3997463.616		4177364.17		2915600
TOTAL LIAB & EQUITY	3753276		3815930.92		3997464.092		4177363.81		2915600
VARIANCE	0		-0.36		0		0		0

	12/31/16		12/31/15		12/31/14		INDUSTRY
Liquidity
Current Ratio (One decimal place)			2.1		2.1		2.2
Current Assets
Current Liabilities
Acid Test Ratio (One decimal place)			1.3		1.3		1.6
Cash
A/R (Net)
Short Term Investments
Current Liabilities
Receivables Turnover (One decimal place)			10.2		9.5		10
Net Credit Sales
Beg A/R
End A/R
Avg. A/R
Inventory Turnover (One decimal place)			11.4		10.4		9.5
CGS
Avg. Inventory
Profitability
Profit Margin (% with two decimal places)			1.66%		3.75%		3.5%
Net Income
Net Sales
Asset Turnover (two decimal places)			2.27		2.21		1.9
Net Sales
Beginning Assets
Ending Assets
Average Assets
Return on Assets (% one decimal place)			3.8%		8.3%		10.5%
Net Income
Avg. Assets
Return on Common Shareholders' Equity
(One decimal place)			5.2%		11.4%		18.3%
Net Income
Preferred Dividends
Beginning Common Equity
Ending Common Equity
Avg. Common Shareholders' Equity
Earnings per Share (EPS) (Two decimal places)			2.27		5.33		3.05
Net Income
Preferred Dividends
Weighted Avg. Common Shares Outstanding
Price-Earnings (P/E ) Ratio (Two decimal places)			14.98		5.93		14.8
Market Price per Share of Stock
Earnings per Share
Payout Ratio (% One decimal place)			10.9%		4.4%		15.0%
Cash Dividends
Net Income
Solvency Ratios
Debt to Total Assets Ratio (% One decimal place)			26.0%		27.3%		42.2%
Total Debt
Total Assets
	Dec. 31, 2016		Dec. 31, 2015		Dec. 31, 2014
Common Dividends	19,200		16,130		15,000
Weighted Average Common Shares	65,000		65,000		65,000
Market Price per Share	35		34		31