Question # 2 The following data represent the balance sheets and income statements, for three and two successive years respectively, for a construction company that works in the commercial sector. You are asked to perform the followings: 1 Fill in the missing data in the balance sheets and income statements. 2 Provide a financial analysis of the company over the last two years by calculating the following ratios and commenting on them. Taking the position of a financial analyst, you are asked to a. Comment on the company's allocation of risk; b. Comment on the company's utilization of assets; and c. Comment on the overall performance of the company over the last three years and compare it to the averages of the commercial sector. i. Quick Ratio ii. Current Ratio ili. Current Liabilities to Net Worth Ratio iv. Debt to Equity Ratico v. Fixed Assets to Net Worth Ratio vi. Current Assets to Total Asset Ratio vii. Collection Period with and without Retention vii. Average Age of Accounts Payable ix. Assets to Revenues Ratio x. Working Capital Tums xi. Accounts Payable to Revenue Ratio xii. Gross Profit Margin xii. General Overhead Ratio xiv. Pretax Profit Margin and After-tax Profit Margin xv. Retum on Assets Ratio xvi. Pretax Return on Equity and After-tax Return on Equity xvi. Degree of Fixed Asset Newness Balance Sheet Information Current Year Last Year 2 Year Ago ASSETS CURRENT ASSETS 128,500.00 $90,640.00 $60,734.00 $80,640.00 Accounts Receivable Trade Accounts Receivable Retention Inventory Cost & Profit ln Excess Of $38,212.00 12,432.00 $4,235.00 $0.00 $34,390.80 $0.00 $9,177.00 $4,549.00 $3,200.00 $0.00 $1,061.00 $9,670.00 $1,119.00 $1,119.00 $5,000.00 Notes Receivable Prepaid Expenses Other Current Assets $4,670.00 Total Current Assets $250,089.00 $139,816.00 Construction Equipment Trucks & Autos Office Equipment 45,000.00 $39,229.00 $31,383.20 $8,981.00 $8,981.00 $7,184.80 12,350.00 $8,057.00 $5,340.00 Total Fixed Assets $66,331.00 $56,267.00 Less Acc. Depreciation Net Fixed Assets Other Assets $46,562.00 $39,889.00 $19,769.00 45,996.00 $50,462.00 $50,462.00 $15,985.70 Total Assets $315,854.00 IABILITY Accounts Payable Trade Accounts Payable Retention Billing In Excess Of Cost & $35,772.00 $35,772.00 $9,856.00 $3,536.00 $2,475.20 $5,415.40 $7,980.00 $5,791.00 $4,053.70 8,000.00 $2,254.00 $1,577.80 Notes Payable Accrued Payable Accrued Taxes Accrued Vacation Other Current Liabilities $5,230.00 $2,405.00 $1,683.50 $308.00$215.60 $17,965.00 $5,330.00 $3,731.00 $1,230.00 $108,854.00 $178,854.00 Total Current Liabilities Long Term Liabilities $48,916.00 $38,916.00 Total Liabilities OWNER EQUITY Capital Stock Retained Earnings Current Period Net Income $50,000.00 $50,000.00 $87,000.00 $50,322.00 $26,923.80 $0.00 $0.00 $0.00 Total Equity Total Liability & Equity 315,854.00 $206,656.00 ncome Statement Information Current Year Last Year REVENUE $908,314.85 $947,806.80 CONSTRUCTION COSTS Materials Labor Subcontractor Equipment Other 92,214.00 $80,226.18 $199,690.00 $173,730.30 $349,694.76 $20,833.00 $28,338.10 1,352.00 $1,352.00 Total Construction Costs $716,037.00 EQUIPMENT COSTS Rent and Lease Payments Depreciation Repair and Maintenance Fuel and Lubrication Tax, Licenses, and Insurances Equipment Costs Charged to Jobs $3,773.00 $5,440.00 $6,673.00 $7,340.30 2,734.00 $3,007.40 7,289.00 $12,150.00 364.00 $400.40 $0.00 GROSS PROFIT OVERHEADS NET PROFIT FROM OPERATIONS OTHER INCOME AND EXPENSES PROFIT BEFORE TAXES $53,827.00 $270,851.85 $1,162.00 INCOME TAX $47,489.06 PROFIT AFTER TAX $190,409.70
