Patel's Fabrics Ltd$.$

Comparative Income Statements

$2019$ $ $2019\%2020$ $ $2020\%2021$ $ $2021\%2022$ $ $2022\%$

Sales $509,235599,100538,900508,100$

COGS $247,350291,000259,200234,300$

Gross margin $261,885308,100279,700273,800$

Operating expenses $90,270106,200104,600104,100$

Operating income $171,615201,900175,100169,700$

Interest expense $9,52011,20010,50011,900$

Income before taxes $162,095190,700164,600157,800$

Income taxes $(40\%)64,83876,28065,84063,120$

Net income $97,257114,42098,76094,680$

Patel's Fabrics Ltd$.$

Comparative Balance Sheets

$2019$ $ $2019\%2020$ $ $2020\%2021$ $ $2021\%2022$ $ $2022\%$

Assets

Cash $28,00032,00025,80020,500$

A$/$R $($net$)85,000126,860127,00094,300$

Inventory $40,00060,00080,70056,000$

Prepaid expenses $8,00011,00010,0004,600$

Total current assets $161,000229,860243,500175,400$

Capital assets $($net$)675,000668,900576,000540,300$

Total assets $836,000898,760819,500715,700$

Liabilities & Shareholders' Equity

Accounts payable $74,78053,12081,20079,100$

Accrued expenses $17,00011,00012,24041,700$

Total current liabilities $91,78064,12093,440120,800$

Long$-$term debt $194,000170,000160,000150,000$

Total liabilities $285,780234,120253,440270,800$

Common stock $($$$0\mathrm{.}50$ par value$)6,0006,0006,0005,000$

Additional paid in capital $99,00099,00099,00062,000$

Retained earnings $445,220559,640461,060377,900$

Total equity $550,220664,640566,060444,900$

Total liabilities & equity $836,000898,760819,500715,700$

Closing Stock Price $$45\mathrm{.}00$ $$38\mathrm{.}00$ $$35\mathrm{.}00$ $$30\mathrm{.}00$

$$ Perform a Horizontal analysis for the year $2019$ to year $2022$ Income Statement and Balance sheet.

$$ Perform a Vertical analysis $($common size statements$)$ for the year $2019$ to year $2022$ Income Statement and Balance sheet.

o Always consider the first year as the base year for the horizontal analysis.

$$ Provide your observations on the trends of the business, based on your horizontal and vertical analysis.

$$ Assess the business$$ liquidity by using liquidity ratios.

o Is the company's position improving or deteriorating? Explain your answer.

$$ Assess the business$$ profitability by using profitability ratios.

o Is the company's position improving or deteriorating? Explain your answer.

$$ Based on the above analysis $($horizontal$,$ vertical, and ratios$),$ write a brief financial summary of the business, and explain any observed risks$/$weaknesses for the business.