Q-03 (MARKS: 25) The Following are the comparative financial statements of C&C Sports for the year 2019 and 2018, along with Industry ratios for 2019, on the basis of these information and after calculating relevant ratios, comment on the liquidity, solvency, efficiency, profitability, valuation and financial flexibility of the company in comparison with Industry. C&C Sports Comparative Balance Sheet Dec-31,2019 Dec-31,2018 Cash 7,752 22,114 Marketable Securities 23,713 83,429 Account Receivable net 600,000 500,000 Inventory 640,372 547,109 Prepaid 24,388 8,164 Property plant and equipment (Net) 574,562 636,459 Total Assets 1,870,787 1,797,275 Account Payables 441,602 445,014 Other Accrued Expenses 86,749 115,626 Short term Debt (interest bearing) 145,000 130,000 Bonds 280,000 300,000 Total Liabilities 953,351 990,640 Common Stock (21,000 shares outstanding) 210,000 210,000 Retained Earnings 707,436 596,635 Total Liabilities and Equity 1,870,787 1,797,275 C&C Sports Comparative Income Statements For 2019 Sales Revenue 5,237,000 Cost of goods sold 3,876,432 Gross Margin 1,360,568 Selling & Admin Exp 1,160,566 Operating Income 200,002 Interest Expense 41,715 Income before Tax 158,287 Income tax Expense 47,486 Net Income 110,801 Dividend declared and paid per share 0.5 Market price per share 18 For 2018 4,654,000 3,464,440 1,189,560 1,067,721 121,839 43,210 78,629 23,589 55,040 0.25 8 2018 55,040 66,912 C& C Sports Comparative Cash Flow Statements 2019 Cash Flow From Operating Activities Net Income 110,801 Adjustments Depreciation 67,789 Changes in Operating Assets &Liabilities Account Receivable (40,284) Inventories (93,263) Prepaid expenses (22,116) Account Payables 3,412 Accrued liabilities (28,877) Net cash provided by operating activities (9,362) Net Cash provided by Investing activities Cash flow by Financing activities Short term borrowings 15,000 Repayment of long-term debt (9,500) Payment of dividends (10,500) Net Cash provided by financing activities (5,000) Increase /(decrease) in cash (14,362) Cash at beginning of period 22,114 Cash at end of period 7,752 (31,466) (98,510) (14,507) 9,651 (8,318) (21,918) 10,000 (14,750) (5,250) (10,000) (31,198) 53,312 22,114 Industry Ratios for 2019 Current Ratio Quick Ratio Account Receivable turnover ratio Average collection period Inventory turnover ratio Average days to sell industry Debt Ratio Debt to equity ratio Times interest earned ratio Gross margin ratio ROA ROE EPS P/E ratio Dividend pay-out ratio Cash inflow from operations as a % of total inflow Free cash Flow 1.5 0.75 6 times 60 days 5 times 45 days 70% 1 3.5 times 35% 8.50% 13.75% 10 4 times 0.75 20% (25,000) 4/4 Q-03 (MARKS: 25) The Following are the comparative financial statements of C&C Sports for the year 2019 and 2018, along with Industry ratios for 2019, on the basis of these information and after calculating relevant ratios, comment on the liquidity, solvency, efficiency, profitability, valuation and financial flexibility of the company in comparison with Industry. C&C Sports Comparative Balance Sheet Dec-31,2019 Dec-31,2018 Cash 7,752 22,114 Marketable Securities 23,713 83,429 Account Receivable net 600,000 500,000 Inventory 640,372 547,109 Prepaid 24,388 8,164 Property plant and equipment (Net) 574,562 636,459 Total Assets 1,870,787 1,797,275 Account Payables 441,602 445,014 Other Accrued Expenses 86,749 115,626 Short term Debt (interest bearing) 145,000 130,000 Bonds 280,000 300,000 Total Liabilities 953,351 990,640 Common Stock (21,000 shares outstanding) 210,000 210,000 Retained Earnings 707,436 596,635 Total Liabilities and Equity 1,870,787 1,797,275 C&C Sports Comparative Income Statements For 2019 Sales Revenue 5,237,000 Cost of goods sold 3,876,432 Gross Margin 1,360,568 Selling & Admin Exp 1,160,566 Operating Income 200,002 Interest Expense 41,715 Income before Tax 158,287 Income tax Expense 47,486 Net Income 110,801 Dividend declared and paid per share 0.5 Market price per share 18 For 2018 4,654,000 3,464,440 1,189,560 1,067,721 121,839 43,210 78,629 23,589 55,040 0.25 8 2018 55,040 66,912 C& C Sports Comparative Cash Flow Statements 2019 Cash Flow From Operating Activities Net Income 110,801 Adjustments Depreciation 67,789 Changes in Operating Assets &Liabilities Account Receivable (40,284) Inventories (93,263) Prepaid expenses (22,116) Account Payables 3,412 Accrued liabilities (28,877) Net cash provided by operating activities (9,362) Net Cash provided by Investing activities Cash flow by Financing activities Short term borrowings 15,000 Repayment of long-term debt (9,500) Payment of dividends (10,500) Net Cash provided by financing activities (5,000) Increase /(decrease) in cash (14,362) Cash at beginning of period 22,114 Cash at end of period 7,752 (31,466) (98,510) (14,507) 9,651 (8,318) (21,918) 10,000 (14,750) (5,250) (10,000) (31,198) 53,312 22,114 Industry Ratios for 2019 Current Ratio Quick Ratio Account Receivable turnover ratio Average collection period Inventory turnover ratio Average days to sell industry Debt Ratio Debt to equity ratio Times interest earned ratio Gross margin ratio ROA ROE EPS P/E ratio Dividend pay-out ratio Cash inflow from operations as a % of total inflow Free cash Flow 1.5 0.75 6 times 60 days 5 times 45 days 70% 1 3.5 times 35% 8.50% 13.75% 10 4 times 0.75 20% (25,000) 4/4