Please answer question 2

Financial statements, which are a major component of a companys financial analysis, provide useful information about a company. These statements assess the financial strengths and weaknesses of the company; analyze non-financial and financial performance; compare the companys performance with its past performance, its competitors, and the industry as a whole; and provide useful information for decision-making and strategic planning.

Instructions: Your team was hired to conduct an independent assessment of the performance of Sargassum Caribbean Incorporated (SCI). SCI is an agriculture startup that manufactures and supplies several types of fertilizer and soil amendment products.

In your assessment of the companys performance as of December 31, 2020, please answer the following questions:

1. Explain the types of financial statements, what they are used for, and their roles in financial analysis:

1. Balance Sheet
2. Income Statement
3. Statement of Retained Earnings
4. Statement of Cash Flows

2. Assess the performance of SCI using the ratios below. Provide a thorough analysis that analyses the results as well as the usefulness of each ratio. In your responses, include any recommendations that may help the company to improve its performance:

1. Current Ratio
2. Quick Ratio
3. Debt Ratio
4. Return on Assets
5. Return on Equity
6. Receivables Turnover
7. Fixed Assets Turnover
8. Total Assets Turnover
9. Profit Margin
10. Gross Profit Margin

3. Identify the limitations of ratio analysis and identify other alternative measures that can assess a companys performance.

600.000 300.000 Assets Current Assets: Cash Accounts Receivable Inventory Total Current Assets Fixed Assets: Property. Plant & Equipment Lass: Accumulated Depreciation Net Fixed Asset 900.000 Sargassum Caribbean Incorporated Balance Sheet as at December 31, 2020 Liabilities Current Liabilities: 200,000 Accounts Payable 400,000 Notes Payable 900.000 1,500,000 Total Current Liabilities Long-Term Liabilities: 1,200,000 Long-Term Debt 1,000,000 Total Long Term Liabilities 200,000 Owners' Equity: Common Stock (51 Par) Capital Surplus Ratio Earnings Total Owners' Equity 1.700,000 Total Liabilities & Owners' Equity 300,000 300,000 100,000 300.000 100.000 500,000 Total Assets 1,700,000 Sargassum Caribbean Incorporated Income Statement for Year Ending December 31, 2020 Sales 2.500,000 Less: Cost of Goods Sold 800.000 Less: Administrative Expenses 100,000 Less Depreciation 104.000 Earnings Before Interest and 1,496,000 Taxes Less: Interest Expense 20,000 Taxable income 1.476,000 Less: Taxes 663.000 Net Income $13,000 Dividends 417.00 Retained Earnings 396,000