QUESTIONS 1. Using ratio analysis and a shetement of sources and uses of funds, prepare Hartly's statement of financial condition. (Financial statements are found in Exhibit I and industry.standard ratios in Exhibit 2.) Based on your analysis, what areas of the firm's operations are in greatest need of immediate attention? Prepare a planned course of action for the solution of the firm's most pressing problems. EXHIBIT 1. Abington-Hill Toys, Inc. December 31, 1976 Comparative Balance Sheets December 31, 1975 and 1976 December 31, 1975 Cash 5 50.000 Accounts receivable 100,000 Inventory 150,000 Total current assets $ 300,000 Plant and equipment $1,200.000 Less: Allowance for depreciation (500,000) Total fixed assets $ 700,000 Total assets $1,000,000 $ 10,00 120.000 150,000 $ 280,000 $1,480.000 (560,000) $ 920,000 $1,200.000 $ Accounts payable Short-term notes . Accrued expenses Total current liabilities Long-term debt Common stock ($10 par) Capital surplus 40,000 50,000 20.000 110,000 200,000 200,000 490,000 $1,000,000 42,000 224,000 24,000 290,000 200,000 200.000 510,000 $1,200,000 Income Statement For Year Ended December 31, 1976 Sales Cost of goods sold Actual 1976 $1.200.000 900.000 $ 300.000 Operating expense: Variable cash operating expense Fixed cash operating expense Depreciation Net income before interest and taxes Interest Net income before taxes Taxes (50%) Nct income hair credit rain $ 84,000 30,000 60,000 $ 174,000 126,000 39,000 S 86.400 43,200 $ 43,200 QUESTIONS 1. Using ratio analysis and a shetement of sources and uses of funds, prepare Hartly's statement of financial condition. (Financial statements are found in Exhibit I and industry.standard ratios in Exhibit 2.) Based on your analysis, what areas of the firm's operations are in greatest need of immediate attention? Prepare a planned course of action for the solution of the firm's most pressing problems. EXHIBIT 1. Abington-Hill Toys, Inc. December 31, 1976 Comparative Balance Sheets December 31, 1975 and 1976 December 31, 1975 Cash 5 50.000 Accounts receivable 100,000 Inventory 150,000 Total current assets $ 300,000 Plant and equipment $1,200.000 Less: Allowance for depreciation (500,000) Total fixed assets $ 700,000 Total assets $1,000,000 $ 10,00 120.000 150,000 $ 280,000 $1,480.000 (560,000) $ 920,000 $1,200.000 $ Accounts payable Short-term notes . Accrued expenses Total current liabilities Long-term debt Common stock ($10 par) Capital surplus 40,000 50,000 20.000 110,000 200,000 200,000 490,000 $1,000,000 42,000 224,000 24,000 290,000 200,000 200.000 510,000 $1,200,000 Income Statement For Year Ended December 31, 1976 Sales Cost of goods sold Actual 1976 $1.200.000 900.000 $ 300.000 Operating expense: Variable cash operating expense Fixed cash operating expense Depreciation Net income before interest and taxes Interest Net income before taxes Taxes (50%) Nct income hair credit rain $ 84,000 30,000 60,000 $ 174,000 126,000 39,000 S 86.400 43,200 $ 43,200
