Refer to the West Mountain Construction Balance sheet and Income statement given on Pages 88 and 89 of your book chapter 6. Calculate the financial ratios to determine this companys liquidity. How is this company performing in relation to industry average? What are your recommendations to the company for their liquidity performance? (10 points) Also calculate the ratios to find the financial operational efficiency. How is this company performing in relation to industry parameters? What are your recommendations to the company for the financial performance? (10 points)

WEST MOUNTAIN CONSTRUCTION BALANCE SHEET Current Year Last Year ASSETS CURRENT ASSETS Cash Accounts Receivable-Trade Accounts Receivable-Retention Inventory Costs and Profits in Excess of Billings Notes Receivable Prepaid Expenses Other Current Assets Total Current Assets 32,387 74,526 6,888 0 9,177 3,139 735 3,114 129,96 34,826 38,212 4,235 0 4,549 0 1,061 1,119 84,002 FIXED AND OTHER ASSETS Construction Equipment Trucks and Autos Office Equipment Total Fixed Assets Loss Acc. Depreciation Net Fixed Assets Other Assets Total Assets WEST MOUNTAIN CONSTRUCTION INCOME STATEMENT REVENUES 789,839 CONSTRUCTION COSTS Materials 92,214 Labor 199,690 Subcontract 401,948 Equipment 20,833 Other 1,352 Total Construction Costs 716,037 EQUIPMENT COSTS Rent and Lease Payments 3,773 Depreciation 6,673 Repairs and Maintenance 2,734 Fuel and Lubrication 7,289 Taxes, Licenses, and Insurance 364 Equipment Costs Charged to Jobs 20,833 Total Equipment Costs 0 GROSS PROFIT 73,802 OVERHEAD 53,827 NET PROFIT FROM OPERATIONS 19,975 OTHER INCOME AND EXPENSE 1,162 PROFIT BEFORE TAXES 21.137 INCOME TAX 3,921 PROFIT AFTER TAXES 17,216 39,229 8,981 8,057 56,267 46,562 9,705 45,996 185,667 39,229 8,981 8,057 56,267 39,889 16,378 50,462 150,842 LIABILITIES Current Liabilities Accounts Payable-Trade Accounts Payable-Retention Billings in Excess of Costs and Profits Notes Payable Accrued Payables Accrued Taxes Accrued Vacation Other Current Liabilities Total Current Liabilities Long-Term Liabilities Total Liabilities 38,682 3,768 1,424 4,022 4,574 2,718 606 6,605 62,399 61,544 123,943 35,772 3,536 2,022 5,791 2,254 2,405 308 5,330 57,418 48,916 106,334 OWNER'S EQUITY Capital Stock Retained Earnings Current Period Net Income Total Equity Total Liabilities and Equity 10,000 51,724 0 61,724 185,667 10,000 34,508 0 44,508 150,842 FIGURE 6-2 Income Statement for West Mountain Construction 12. Determine the assets to revenues ratio for the commer- cial construction company in Figures 6-1 and 6-2. What insight does this give you into the company's financial operations? 13. Determine the working capital turns for the commer- cial construction company in Figures 6-1 and 6-2. What inninht di WEST MOUNTAIN CONSTRUCTION BALANCE SHEET Current Year Last Year ASSETS CURRENT ASSETS Cash Accounts Receivable-Trade Accounts Receivable-Retention Inventory Costs and Profits in Excess of Billings Notes Receivable Prepaid Expenses Other Current Assets Total Current Assets 32,387 74,526 6,888 0 9,177 3,139 735 3,114 129,96 34,826 38,212 4,235 0 4,549 0 1,061 1,119 84,002 FIXED AND OTHER ASSETS Construction Equipment Trucks and Autos Office Equipment Total Fixed Assets Loss Acc. Depreciation Net Fixed Assets Other Assets Total Assets WEST MOUNTAIN CONSTRUCTION INCOME STATEMENT REVENUES 789,839 CONSTRUCTION COSTS Materials 92,214 Labor 199,690 Subcontract 401,948 Equipment 20,833 Other 1,352 Total Construction Costs 716,037 EQUIPMENT COSTS Rent and Lease Payments 3,773 Depreciation 6,673 Repairs and Maintenance 2,734 Fuel and Lubrication 7,289 Taxes, Licenses, and Insurance 364 Equipment Costs Charged to Jobs 20,833 Total Equipment Costs 0 GROSS PROFIT 73,802 OVERHEAD 53,827 NET PROFIT FROM OPERATIONS 19,975 OTHER INCOME AND EXPENSE 1,162 PROFIT BEFORE TAXES 21.137 INCOME TAX 3,921 PROFIT AFTER TAXES 17,216 39,229 8,981 8,057 56,267 46,562 9,705 45,996 185,667 39,229 8,981 8,057 56,267 39,889 16,378 50,462 150,842 LIABILITIES Current Liabilities Accounts Payable-Trade Accounts Payable-Retention Billings in Excess of Costs and Profits Notes Payable Accrued Payables Accrued Taxes Accrued Vacation Other Current Liabilities Total Current Liabilities Long-Term Liabilities Total Liabilities 38,682 3,768 1,424 4,022 4,574 2,718 606 6,605 62,399 61,544 123,943 35,772 3,536 2,022 5,791 2,254 2,405 308 5,330 57,418 48,916 106,334 OWNER'S EQUITY Capital Stock Retained Earnings Current Period Net Income Total Equity Total Liabilities and Equity 10,000 51,724 0 61,724 185,667 10,000 34,508 0 44,508 150,842 FIGURE 6-2 Income Statement for West Mountain Construction 12. Determine the assets to revenues ratio for the commer- cial construction company in Figures 6-1 and 6-2. What insight does this give you into the company's financial operations? 13. Determine the working capital turns for the commer- cial construction company in Figures 6-1 and 6-2. What inninht di