Required (Must be presented in a word processed document, computation can be handwritten)

1. Prepare a separate data analysis of the income statement and balance sheet of Opossumtown Inc. for the last two years. Use the following format and provide a heading title for each separate analysis:

Data Title 20X2 20X1 Industry Average

Your data titles are based on the 7 industry averages provided in the above opening paragraph (4 are related to the balance sheet and 3 to the income statement). Round all computations, except days, to the tenths decimal place. Show supporting computations of your data analysis on a separate sheet. For the inventory and accounts receivable turnover rate computations, (used to compute the days) use the year-end balances of inventory and accounts receivable respectively, in place of the average balances.

Prepare separate bulleted lists indicating the strengths and /or weaknesses of Opossumtown Inc.s profitability and solvency/liquidity based on your review of each financial statement and your data analysis above.

Also, provide a short statement of your outlook for the company for the next year.

Debt ratio 42.5%, Current ratio 2.2 to 1, Days to sell inventory 155 days, Average collection period 40 days, Gross Profit Margin 42.8%, Operating Margin 23.6%, Profit Margin 10.2%. Additionally, you have learned that the company sells its merchandise on net 45 days credit.

Opossumtown, Inc. Income Statement For the Year's Ended July 31, 20X2 and July 31, 20X1 20X2 $900,000 530,000 $370,000 20X1 $750,000 420,000 330,000 60,000 52,000 20,000 132,000 40,000 22,000 13,000 75,000 Sales Cost of goods sold Gross profit Operating expenses: Selling expenses Commissions Advertising Travel Total selling expenses General and administrative expenses Salaries Rent Utilities Supplies Total general and admin. expenses Total operating expenses Operating income Non-operating Items: increase/(decrease) Add: Interest/dividend revenue Deduct: Interest expense Total net non-operating items Income before income taxes Income tax expense Net income 70,000 22,000 12,000 7,000 111,000 60,000 20,000 10,000 5,000 95,000 243,000 127,000 170,000 160,000 20,800 32,000 16,000 36,000 (11,200) 115,800 40,800 $ 75,000 (20,000) 140,000 50,000 $ 90,000 Opossumtown, Inc. Comparative Balance Sheets July 31, 20X2 and July 31, 20X1 20X2 20X1 Assets Current Assets: Cash and Cash equivalents Short-term investments (Marketable securities) Accounts receivables (net) Inventories Prepaid expenses (Supplies) Total current assets $ 60,000 90,000 120,000 180,000 50,000 $ 500,000 $ 40,000 78,000 140,000 200,000 42.000 $ 500,000 Property, Plant, and Equipment: Land Building Equipment Total property, plant, and equipment $ 260,000 500,000 240,000 $1,000,000 $ 260,000 500,000 170,000 $ 930,000 Total Assets $1,500,000 $1,430,000 Liabilities Current liabilities: Accounts payable Income taxes payable Dividends payable Total current liabilities $ 150,000 10,000 40,000 $ 200,000 $ 204,000 10,000 36,000 $ 250,000 Long-term liabilities: 7% Mortgage payable (due in 10 years) Total Liabilities $ 400,000 $ 600,000 $ 465,000 $ 715.000 Stockholders' Equity Capital stock, $100 par value Retained earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity $ 710,000 190,000 $ 900,000 $1,500,000 $ 560,000 155,000 $ 715,000 $1,430.000