Please to do Required of Problem 14-10 and 14-11

Problems 14.10 and 14.11 Financial Statement Analysis. Mandrake Motorcycles was started three years ago. The company manufactures and sells classic cycles similar in style to Harley-Davidson and Indian motorcycles made in the late 1940s. The following financial information for the company relates to Problems 14.10 and 14.11: Mandrake Motorcycles Balance Sheets December 31, 2021 December 31, 2020 Assets $ 240,000 185,000 850,000 200,000 $ 425,000 200,000 630,000 210,000 1,465,000 1,175,000 $2,640,000 1,475,000 1,075,000 $2,550,000 Current assets: Cash and cash equivalents Accounts receivable Inventory Other current assets Total current assets Property, plant, and equipment, net Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Short-term debt payable Other current liabilities Total current liabilities Long-term debt Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 260,000 370,000 285,000 915,000 195,000 1,110,000 $ 205,000 320,000 280,000 805,000 410,000 1,215,000 1,325,000 115,000 1,325,000 100,000 1,440,000 $2,550,000 1,425,000 $2,640,000 Mandrake Motorcycles Income Statements Year Ended December 31, 2021 Year Ended December 31, 2020 Net sales $1,590,000 $1,690,000 980,000 610,000 1,175,000 515,000 300,000 210,000 210,000 200,000 Cost of goods sold Gross margin Operating expenses: Selling expenses General and administrative expenses Total operating expenses Operating income Interest expense Income before taxes Income taxes 510,000 100,000 48,000 410,000 105,000 72,000 52,000 10,400 41,600 33,000 6,600 Net income $ $ 26,400 Problem 14.10 (L01, 3) Comprehensive Financial Statement Analysis Marty Monk Fisher owns the largest motorcycle dealership in southern Ohio. Recently, he was approached by Bob Sherman, founder of Mandrake Motorcycles, and offered the opportunity to be the sole distributor of Mandrake bikes in the state. Acceptance of the offer will require Monk to open a dedicated Mandrake showroom and repair facility and, obviously, stock Mandrake cycles and parts. Monk is quite impressed by the Man- drake product, but before making a major investment, he wants to be confident that the company will be around for the long haul. Accordingly, he has asked you to analyze the audited financial statements of Mandrake for the previous two years. Required a. Prepare a horizontal and a vertical analysis of the 2021 and 2020 financial statements. b. Calculate the following ratios for 2021 and 2020: return on assets, gross margin percentage, receiv- ables turnover, days' sales in receivables, inventory turnover, days' sales in inventory, debt to equity, and times interest earned. c. Based on your analysis in parts a and b, comment on any matters that Monk should probe in an upcoming meeting with Bob Sherman from Mandrake. d. Based on the limited information available, do you think Monk should open a Mandrake showroom? Problem 14.11 (L01, 3) Additional Information Related to Problem 14.10 In 2022, Mandrake Motorcycles declared bankruptcy. Subsequently, it was determined that in fiscal 2021, the company pro- duced more units than needed to fill pending orders. The result was a substantial decrease in production cost per unit. The company uses the LIFO inventory method. Required Discuss how (or if) this information is consistent with the results of the analysis conducted in Prob- lem 14.10, parts a and b