S&S AIR, INC. 2014 Income Statement 90 Frarciel Statements and Long-Term Finarcanano PART s. The company has two mod which $40258230 els; the Birdie, which sells for $53,000, and the Eagle,w sells for $78,000. Sales 5,105,100 804,220 s 4,013,484 630 520 3,382.94 aireraft, its opera Cost of goods sola Although the company manufactures tions are different from commercial aircraft companies Air builds aircraft to order. By using prefabr Other expenses company can complete the manufacture of an airplane in only e weeks. The company also receives a deposit on each as another partial payment before the order is contrast, a commercial airplane may take one one-half to two years to manufacture once the order is Mark and Todd have provided the following financial state- ments. Chris has gathered the industry ratios for the light air- Taxable income : Taxes (40%) Net income complete. In 2,029,768 610,000 Dividends 1,419,768 Add to retained earnings plane manufacturing industry S&S AIR, ING. 2014 Balance Sheet Liabilities and Equity Current liabilities $ 929,005 $ 3,050.355 $ 5,500,000 Current assets Cash Accounts receivable Inventory $ 456,435 Accounts payable 733,125 Notes payable Total current liabilities 1,073,180 Total current assets2.262.740 Long-term debt Net p plant and equipment $17.723,430 Shareholder equity Common stock 400,000 11.035,815 $11.435.815 $19,986,170 Retained earnings Total equity Total assets 19.986,170 Total liabilities and equity Light Airplane Industry Ratios QUESTIONS Upper 1. Using the financial statements provided for Sas Air, calculate each of the ratios listed in the table for the light aircraft industry Quartile Median Quartile Current ratio Quick ratio Cash ratio Total asset turnover 50 21 2. Mark and Todd agree that a ratio analysis can prou 21 measure of the company's performance. They have cho- 138 sen 85 4.89 6.15 10.89 ng as an aspirant company. Would you choose Boeing as an aspirant company? Why or why not are other aircraft manufacturers S&S Air could use as pirant companies. Discuss whether it is appropriate to use any of the following companies: Bombardier, Embraer Cirrus Design Corporation, and Cessna Aircraft Compury Receivables turnover Total debt ratio Debt-equity ratio 6.27 9.82 14.11 1.08 1.68 2.08 2.56 68 1.56 3. Compare the performance of S&S Air to the industry Times interest earned5.188.06 Cash coverage ratio5.84 9.41 10.27 Profit margin Return on assets Return on equity 4.05% 6.05% 9.93% 5.10% 10.53% 18.14% 7.15% 13.21% 26.15% create an inventory ratio calculated as inventory dividku by current liabilities. How do you think S&S Airsrati For each ratio, comment on why it might be viewed as positive or negative relative to the industry. Suppose yo would compare to the industry average