Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the companys financial records are not well maintained.

The initial investment is Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors havent received detailed financial statements from Tad. But thanks to word of mouth among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening a new surfboard store is Hawaii, as well as supplying his sticks (surfer lingo for boards) to other sellers.

Tads expansion plans require a significant investment which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors required more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired financial analyst Christina Wolfe to evaluate the performance of the company over the past year.

After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the following information:

	2014	2015
Cost of Goods Sold	$ 196,619	$ 248,263
Cash	$ 28,372	$ 42,865
Depreciation	$ 55,506	$ 62,738
Interest Expense	$ 12,067	$ 13,831
Selling and Administrative Expense	$ 38,668	$ 50,469
Accounts Payable	$ 20,143	$ 34,091
Net Fixed Assets	$ 244,881	$ 298,350
Sales	$ 385,724	$ 470,172
Accounts Receivable	$ 20,104	$ 26,078
Notes Payable	$ 22,855	$ 24,955
Long-term debt	$ 123,607	$ 140,000
Inventory	$ 38,706	$ 52,057
New Equity Raised from Stockholders	$ -	$ 15,000

Now that you have assembled Sunsets raw data into useable income statements and balance sheets, and have evaluated the cash flow situation Sunset is faced with, Christina has asked you to assess any changes in the companys financial performance from 2014 to 2015. Specifically, Christina asks you to compute a sampling of financial ratios to be used in evaluating any meaningful changes in the companys performance.

Complete the following table:

	2014	2015
Current Ratio
Quick Ratio		1.17
Inventory Turnover (use year-end inventory balances)	5.08
Day's Sales in Inventory		76.53
Debt-to-Equity Ratio
Cash Coverage Ratio	12.47
Profit Margin
Return on Equity

6. Christina asks for your comments on the following issues. Be sure to support your commentary with the data you prepared in the above table.

1. How has the companys inventory efficiency changed over the past year? Is inventory selling more or less quickly?

2. Has the companys ability to cover its interest obligations improved or diminished over the past year?

3. How has the companys profitability changed since last year? How are the stockholders likely to respond to any changes in the rate of return earned on their investment?

i already answered th cash flow, income statement and balance sheet.