The Business This practice set is designed in two parts. The first part provides a review of the financial statements of Ellie's Earphones, Inc. selling earphone inventory. Ellie's Earphones, Inc., whose primary operation is the sale of earphones to on-line customers and retailers in the market. Each student will prepare a financial analysis and Statement of Cash Flow for the company. In the second part, Ellie's Earphones, Inc., decides to start producing the earphones and selling them directly on the Internet and to customers. All cases of academic dishonesty will be reported to the Office of Student Life. Part One Instructions The financial information for the past two years (2021 and 2022) is provided. Ellie's Earphones collection policy is 30 days and the benchmark for the inventory is 35 days. Using a spreadsheet application, such as Microsoft Excel, and the information from the previous years, provide the following: 1. Prepare a Statement of Cash Flows for the current year using the indirect method. 2. Using horizontal analysis, prepare a Comparative Balance Sheet. 3. Using vertical analysis, prepare an Income Statement. 4. Using the textbook, calculate the ratios set out below: a. Working Capital 2021, 2022 b. Current Ratio - 2021, 2022 C. Quick Ratio-2021, 2022 d. Accounts Receivable Turnover - 2022 e. f. g. Number of Days Sales in Receivables - 2022 Inventory Turnover - 2022 Number of Days Sales in Inventory - 2022 h. Ratio of Liabilities to Stockholders' Equity - 2022 i. Return on Total Assets - 2022 j. Return on Stockholders' Equity- 2022 k. Earnings Per Share -2021, 2022 The financial statements provided in this practice set can be downloaded from blackboard. Read the instructions provided before downloading. Download the Excel files on Blackboard (Income Statement, Statement of Stockholders' Equity and Balance Sheet) and add a column and calculate the ratios for the vertical and horizontal analysis. 5. Acting as an accounting advisor to the firm, prepare a memo in which you analyze the financial statements prepared in step two and three and along with the ratios that have been calculated above and prepare an analysis of the company's financial position. Identify two strengths and two weaknesses in the company. Make two recommendations to improve the company's financial position. Be specific in each of the recommendations and use the ratios to support your analysis. The length should be no more than one paragraph. Print out your memo and use it to answer the questions in Blackboard. Part of the assignment requires you to go to the Writing Center for help. You will receive a receipt from the writing center when you attend that you will turn in with the assignment.