The financial information for the past two years (2018 and 2017) is provided. 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 and round to two decimals. Do the ratios for both years unless the ratio needs an average then only do it for the current year: a. Current Ratio b. Quick ratio C. Accounts Receivable Turnover d. Days Sales in Receivables e. Inventory Turnover f. Days Sales in Inventory g. Working Capital h. Liabilities to Stockholders' Equity i. Earnings Per Share 5. Acting as an accounting advisor to the firm, prepare a memo in which you analyze the financial statements you prepared in step two 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 company has a credit policy of 1/10, n/30 and uses this as part of its evaluation. The length should be no more than one page. If there are any grammatical or spelling errors you will not receive credit for the memo. 6. Please have the following information complete before entering your answers onto blackboard: a. Statement of Cash Flows b. Balance Sheet with horizontal analysis C. Income Statement with vertical analysis d. Worksheet showing your ratios e. Memo analyzing the company's strengths and weaknesses with two recommendations Assets Current Assets: Cash Carlo's Crazy Cars Comparative Balance Sheet December 31, 2018 and 2017 2018 2017 $ 75,000 $ 97,000 Accounts Receivable, Net $ 150,000 $ 100,000 Merchandise Inventory $ 130,000 $ 60,000 Prepaid Rent $ 30,000 $ 10,000 Total Current Assets $ 385,000 $ 267,000 Property, Plant, and Equipment: Equipment $ 435,000 $ 208,000 Less: Accumulated Depreciation - Equipment $ (80,000) $ (52,400) Total Property, Plant, and Equipment $ 355,000 $ 155,600 Total Assets $ 740,000 $ 422,600 Liabilities and Stockholders' Equity 2018 2017 Current Liabilities: Accounts Payable Unearned Revenue Salaries Payable Federal Income Taxes Payable esses $ 84,000 $ 110,150 $ 42,000 $ 50,000 $ 50,000 $ 33,000 $ 10,000 $ 10,000 Total Current Liabilities $ 186,000 es $ 203,150 Long Term Liabilities Note Payable $ 120,000 $ Total Long-Term Liabilities $ 120,000 $ Total Liabilities $ 306,000 $ 203,150 Stockholders' Equity: Common Stock, $1 Par $ 163,000 $ 54,300 Retained Earnings Paid-In Capital in Excess of Par Total Stockholders' Equity es $ 18,000 $ 18,000 Total Liabilities and Stockholders' Equity ess $ 253,000 $ 147,150 $ 434,000 $ 219,450 $ 740,000 es $ 422,600 Comparative Income Statement Carlo's Crazy Cars Comparative Statement of Income For the Years Ended December 31, 2018 and 2017 2018 2017 Sales Cost of Goods Sold Gross Margin Operating Expenses: Salaries and Wages Expense Rent Expense Depreciation Expense Total Operating Expenses Income from Operations $ 180,000 $ 1,200,000 $ 850,000 $ 650,000 $ 500,000 $ 550,000 $ 350,000 $ 125,000 $ 100,000 $ 25,000 $ 25,000 $ 30,000 $ 18,000 $ 143,000 $ 370,000 $ 207,000 Gain on Sale of Equipment $ 4,500 $ 0 Interest Expense $ (8,000) $ (6,500) Increase (Decrease) in Operating Income $ (3,500) $ (6,500) Income before Taxes $ 366,500 $ 200,500 Federal Income Taxes 30% $ 109,950 $ 60,150 Net Income $ 256,550 $ 140,350 Statement of Retained Earnings Retained Earnings, Beginning of Year Net Income Less: Dividends Retained Earnings, End of Year Carlo's Crazy Cars Comparative Statement of Retained Earnings For the Years Ended December 31, 2018 and 2017 2018 $ 147,150 $ 256,550 $ 150,700 $ 253,000 2017 $ 100,650 $ 140,350 $ 93,850 $ 147,150 1. Equipment with a cost of $15,000 on which depreciation has been recorded was sold for cash. Equipment was purchased using cash and a long-term note payable. 2. Stock was issued for cash. 3. Dividends were paid in cash.