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 Ratio v. Fixed Assets to Net Worth Ratio vi. Current Assets to Total Asset Ratio vil. Collection Period with and without Retention vill Average Age of Accounts Payable ix. Assets to Revenues Ratio x, working Capital Turns xi. Accounts Payable to Revenue Ratio xi. Gross Profit Margin xii. General Overhead Ratio xiv. Pretax Profit Margin and After-tax Profit Margin xv. Return on Assets Ratio xvi. Pretax Return on Equity and After-tax Return on Equity xvii. Degree of Fixed Asset Newness Balance Sheet Information Current Year Last Year 2 Year Ago ASSETS CURRENT ASSETS Cash $128,500.00 $90,640.00 $60,734.00 $34,390.80 $38,212.00 $12,432.00 $4,235.00 $0.00 Accounts Receivable Trade $80,640.00 Accounts Receivable Retention Inventory Cost & Profit In Excess Of Billing Notes Receivable Prepaid Expenses Other Current Assets $5,000.00 $0.00 $9,177.00 $4,549.00 $3,200.00 $0.00 1,061.00 $9,676.00 $1,119.00 $1,119.00 $4,670.00 $0.00 Total Current Assets $250,089.00 $139,816.00 $45,000.00 $39,229.00 $31,383.20 Construction Equipment Trucks & Autos Office Equipment $8,981.00 $8,981.00 $7,184.80 $12.350.00 $8,05700 $5,340.00 Total Fixed Assets s66,331.00 $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 LIABILITY Accounts Payable Trade $35,772.00 $35,772.00 Accounts Payable Retention$9,856.00 $3,536.00 $2,475.20 Billing In Excess Of Cost & $5,415.40 $7,980.00 $5,791.00 $4,053.70 $8,000.00 $2,254.00 $1,577.80 $5,230.00 $2,405.00 $1,683.50 $308.00 $215.60 $17,965.00 $5,330.00 $3,731.00 $1,893.00 Profit Notes Payable Accrued Payable Accrued Taxes Accrued Vacation Other Current Liabilities $1,230.00 bilities $108,854.00 Total Liabilities $178,854.00 Long Term Liabilities $48,916.00 $38,916.00 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 $o.00 Total Equity Total Liability & Equity $315,854.00 $206,656.00 Income Statement Information Current Year Last Year REVENU $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 $5440.00 $6,673.00 $7,340.30 $2,734.00 $3,007.40 $7,289.00 $12,150.00 $364.00 $400.40 Total Equipment Costs $0.00 GROSS PROFIT OVERHEADS NET PROFIT FROM OPERATIONS $53,827.00 $270,851.85 R INCOME AND EXPENSES$1.162.00 $1,162.00 PROFIT BEFORE TAXES $158,296.85 INCOME TAX $47,489.06 PROFIT AFTER TAX $190,409.70 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 Ratio v. Fixed Assets to Net Worth Ratio vi. Current Assets to Total Asset Ratio vil. Collection Period with and without Retention vill Average Age of Accounts Payable ix. Assets to Revenues Ratio x, working Capital Turns xi. Accounts Payable to Revenue Ratio xi. Gross Profit Margin xii. General Overhead Ratio xiv. Pretax Profit Margin and After-tax Profit Margin xv. Return on Assets Ratio xvi. Pretax Return on Equity and After-tax Return on Equity xvii. Degree of Fixed Asset Newness Balance Sheet Information Current Year Last Year 2 Year Ago ASSETS CURRENT ASSETS Cash $128,500.00 $90,640.00 $60,734.00 $34,390.80 $38,212.00 $12,432.00 $4,235.00 $0.00 Accounts Receivable Trade $80,640.00 Accounts Receivable Retention Inventory Cost & Profit In Excess Of Billing Notes Receivable Prepaid Expenses Other Current Assets $5,000.00 $0.00 $9,177.00 $4,549.00 $3,200.00 $0.00 1,061.00 $9,676.00 $1,119.00 $1,119.00 $4,670.00 $0.00 Total Current Assets $250,089.00 $139,816.00 $45,000.00 $39,229.00 $31,383.20 Construction Equipment Trucks & Autos Office Equipment $8,981.00 $8,981.00 $7,184.80 $12.350.00 $8,05700 $5,340.00 Total Fixed Assets s66,331.00 $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 LIABILITY Accounts Payable Trade $35,772.00 $35,772.00 Accounts Payable Retention$9,856.00 $3,536.00 $2,475.20 Billing In Excess Of Cost & $5,415.40 $7,980.00 $5,791.00 $4,053.70 $8,000.00 $2,254.00 $1,577.80 $5,230.00 $2,405.00 $1,683.50 $308.00 $215.60 $17,965.00 $5,330.00 $3,731.00 $1,893.00 Profit Notes Payable Accrued Payable Accrued Taxes Accrued Vacation Other Current Liabilities $1,230.00 bilities $108,854.00 Total Liabilities $178,854.00 Long Term Liabilities $48,916.00 $38,916.00 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 $o.00 Total Equity Total Liability & Equity $315,854.00 $206,656.00 Income Statement Information Current Year Last Year REVENU $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 $5440.00 $6,673.00 $7,340.30 $2,734.00 $3,007.40 $7,289.00 $12,150.00 $364.00 $400.40 Total Equipment Costs $0.00 GROSS PROFIT OVERHEADS NET PROFIT FROM OPERATIONS $53,827.00 $270,851.85 R INCOME AND EXPENSES$1.162.00 $1,162.00 PROFIT BEFORE TAXES $158,296.85 INCOME TAX $47,489.06 PROFIT AFTER TAX $190,409.70