The following is the balance sheet and profit and loss statement of Snowbound Ski Company for several years. Snowbound Ski Company is a company specializing in selling various brands of ski equipment. Complete the following questions based on these financial statements. a. Describe how the 2012 snowfall company's profit and loss statement was reflected in the biennial balance sheet. b. Calculate the values for the following ratios at the end of 2012 and 2013. Define each ratio, including how it is calculated, and then simply describe how you think about each ratio in one or two sentences, and what changes in the values during the two years reflect what changes in Snowbound Ski Company? i. Current ratio ii. Quick (acid test) ratio iii. Inventory turnover ratio iv. Accounts receivable turnover ratio v. Fixed asset turnover Ratio vi. Total asset turnover ratio vii. Debt-to-equity ratio viii. Total debt-to-equity ratio ix. Interest interest earned ratio x. Gross profit margin ratio Xi. Operating profit margin ratio xii. Return on assets ratio xiii. Return on equity Return on equity c. Describe what is a vertical analysis of financial statements. Then, perform a vertical analysis of the 2013 and 2012 year-end data on the balance sheet below and describe your findings. d. Describe what is Horizontal Analysis of Financial Statements. Then, perform a horizontal analysis of the time period between December 31, 2012 and December 31, 2013, and describe your findings. e. Perform a longitudinal analysis of the 2013 and 2012 year-end data for the income statement and describe your findings. f. Perform a horizontal analysis of the time period between December 31, 2012 and December 31, 2013 and describe your findings. g. Based on the above analysis results, would you consider investing in Feng Xue Company? why? Snowbound Ski Company Balance Sheet 12/31/2013 12/31/2012 ASSETS Current Assets Cash $1,375,000 $1,476,000 Accounts Receivable, net 1,013,000 819,000 Inventory 1,429,000 497,000 Prepaid Expenses 141,000 132,000 Deferred Income taxes 47,000 40,000 Total Current Assets $4,005,000 $2,964,000 Fixed Assets Property, Plant, and Equipment $3,174,000 $2,322,000 Other Assets 180,000 165,000 Total Fixed Assets $3,354,000 $2,487,000 TOTAL ASSETS $7,359,000 $5,451,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $ 375,000 $ 302,000 Accrued Compensation and related costs 110,000 97,000 Accrued Taxes 158,000 138,000 Current Portion of Mortgage and Other Long-term Debt 99,000 82,000 Total Current Liabilities $ 742,000 $ 619,000 Long-term Liabilities Mortgage Payable $1,000,000 $1,050,000 Other Long-term Debt 1,630,000 778,000 Total Long-term Liabilities $2,630,000 $1,828,000 Shareholders Equity Common Stock ($0.1 par value; 3,500,000 shares) $ 350,000 $ 350,000 Paid-in-Capital in excess of par 2,415,000 2,415,000 Retained Earnings 1,222,000 239,000 Total Shareholders Equity $3,987,000 $3,004,000 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $7,359,000 $5,451,000 Snowbound Ski Company Income Statement 12/31/2013 12/31/2012 Net Revenues Cash Sales $2,889,000 $2,751,000 Credit Sales 6,046,000 5,258,000 Total Net Revenues $8,935,000 $8,009,000 Cost of Goods Sold 5,361,000 4,405,000 Gross Profit $3,574,000 $3,604,000 Operating Expenses Salaries $1,258,000 $1,183,000 Insurance 155,000 116,000 Depreciation 150,000 135,000 General and Administrative Expenses 489,000 479,000 Total Operating Expenses $2,052,000 $1,913,000 Total Operating Income $1,522,000 $1,691,000 Interest Expense 10,000 11,000 Earning before Income Taxes $1,512,000 $1,680,000 Income Taxes 529,000 588,000 Net Income $ 983,000 $1,092,000

2. Below is the balance sheet for the Sullivan Hotel on December 31, 2012. In 2012, the company generated a net income of $430,000. Use this information and the financial statements provided to complete the following questions. a. Calculate 2012 earnings per share. b. Assume that in 2013, Sullivan Hotel issued nearly 300,000 shares with a par value of $1, with a market price of $10 per share. 50% of the proceeds will be used to repay long-term debt, 25% will be used to purchase fixed assets, and the rest will be deposited into the company's bank account. Please prepare a balance sheet after the issuance of new shares. (Note that the portion of the stock selling price that is more than the face value should be included in the paid in capital section.) c. Assume that Sullivan Hotel generated a net income of $450,000 in 2013 (after the issuance of new shares). Calculate the new earnings per share. What do you think shareholders will look at the results of this new stock issue? SULLIVAN HOTELS CORPORATION Balance Sheet December 31, 2012 Current Assets Current Liabilities Cash $ 50,000 Wages Payable $ 30,000 Marketable Securities 30,000 Accounts Payable 25,000 Accounts Receivable 40,000 Notes Payable 50,000 Inventory 60,000 Total Current Liabilities $ 105,000 Prepaid Expenses 15,000 Total Current Assets $ 195,000 Long-term Debt M ortgage a n d L T L o a n s $ 2 , 5 0 0 , 0 0 0 Fixed Assets Total Long Term Debt $2,500,000 Net Fixed Assets $7,000,000 Total Fixed Assets $7,000,000 Owners Equity C o m m o n S t o c k ( 3 , 0 0 0 , 0 0 0 s h a r e s ( $ 1 p a r ) ) $ 3 , 0 0 0 , 0 0 0 P a i d i n C a p i t a l i n e x c e s s o f p a r 5 0 0 , 0 0 0 R e t a i n e d E a r n i n g s 1 , 0 9 0 , 0 0 0 Total Owners Equity $4,590,000 Total Assets $7,195,000 Total Liabilities and Owners Equity $7,195,000

Snowbound Ski Company Balance Sheet 12/31/2013 12/31/2012 ASSETS Current Assets Cash Accounts Receivable, net Inventory Prepaid Expenses Deferred Income taxes Total Current Assets $1,375,000 1,013,000 1,429,000 141.000 47.000 $4,005,000 $1,476,000 819,000 497,000 132.000 40.000 $2,964,000 Fixed Assets Property, Plant, and Equipment Other Assets Total Fixed Assets $3,174,000 180.000 $3.354,000 $2,322,000 165.000 $2.487,000 TOTAL ASSETS S7.359,000 $5,451,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable Accrued Compensation and related costs Accrued Taxes Current Portion of Mortgage and Other Long-term Debt Total Current Liabilities S 375,000 110,000 158,000 99,000 $ 742,000 S302,000 97.000 138,000 82.000 S 619,000 Long-term Liabilities Mortgage Payable Other Long-term Debt Total Long-term Liabilities $1,000,000 1.630,000 S2,630,000 $1,050,000 778,000 $1,828,000 Shareholders' Equity Common Stock (S0.1 par value; 3,500,000 shares) Paid-in-Capital in excess of par Retained Earnings Total Shareholders' Equity S 350,000 2,415,000 1.222.000 $3.987.000 $ 350,000 2,415,000 239.000 $3,004,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY S7.359.000 $5,451,000 Snowbound Ski Company Income Statement 12/31/2013 12/31/2012 Net Revenues Cash Sales Credit Sales Total Net Revenues Cost of Goods Sold Gross Profit $2,889,000 6,046,000 $8,935,000 5,361.000 $3,574,000 $2,751,000 5.258,000 $8,009,000 4.405.000 $3,604,000 Operating Expenses Salaries Insurance Depreciation General and Administrative Expenses Total Operating Expenses $1,258,000 155,000 150,000 489.000 $2,052,000 $1,183,000 116,000 135,000 479.000 $1.913,000 Total Operating Income $1,522,000 $1,691,000 Interest Expense 10,000 11,000 Earning before Income Taxes $1,512,000 $1,680,000 Income Taxes 529.000 588.000 Net Income $_983,000 S1,092.000 Current Assets Cash Marketable Securities Accounts Receivable Inventory Prepaid Expenses Total Current Assets $ 30,000 25,000 50.000 $ 105,000 SULLIVAN HOTELS CORPORATION Balance Sheet December 31, 2012 Current Liabilities $ 50,000 Wages Payable 30,000 Accounts Payable 40,000 Notes Payable 60,000 Total Current Liabilities 15.000 S 195.000 Long-term Debi Mortgage and LT Loans Total Long Term Debt $7,000,000 $7,000,000 Owners' Equity Common Stock (3,000,000 shares (S1 par)) Paid in Capital in excess of par Retained Earnings Total Owners' Equity $2.500.000 $2,500,000 Fixed Assets Net Fixed Assets Total Fixed Assets $3,000,000 500,000 1,090,000 $4,590,000 Total Assets $7.195.000 Total Liabilities and Owner's Equity $7.195.000 Snowbound Ski Company Balance Sheet 12/31/2013 12/31/2012 ASSETS Current Assets Cash Accounts Receivable, net Inventory Prepaid Expenses Deferred Income taxes Total Current Assets $1,375,000 1,013,000 1,429,000 141.000 47.000 $4,005,000 $1,476,000 819,000 497,000 132.000 40.000 $2,964,000 Fixed Assets Property, Plant, and Equipment Other Assets Total Fixed Assets $3,174,000 180.000 $3.354,000 $2,322,000 165.000 $2.487,000 TOTAL ASSETS S7.359,000 $5,451,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable Accrued Compensation and related costs Accrued Taxes Current Portion of Mortgage and Other Long-term Debt Total Current Liabilities S 375,000 110,000 158,000 99,000 $ 742,000 S302,000 97.000 138,000 82.000 S 619,000 Long-term Liabilities Mortgage Payable Other Long-term Debt Total Long-term Liabilities $1,000,000 1.630,000 S2,630,000 $1,050,000 778,000 $1,828,000 Shareholders' Equity Common Stock (S0.1 par value; 3,500,000 shares) Paid-in-Capital in excess of par Retained Earnings Total Shareholders' Equity S 350,000 2,415,000 1.222.000 $3.987.000 $ 350,000 2,415,000 239.000 $3,004,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY S7.359.000 $5,451,000 Snowbound Ski Company Income Statement 12/31/2013 12/31/2012 Net Revenues Cash Sales Credit Sales Total Net Revenues Cost of Goods Sold Gross Profit $2,889,000 6,046,000 $8,935,000 5,361.000 $3,574,000 $2,751,000 5.258,000 $8,009,000 4.405.000 $3,604,000 Operating Expenses Salaries Insurance Depreciation General and Administrative Expenses Total Operating Expenses $1,258,000 155,000 150,000 489.000 $2,052,000 $1,183,000 116,000 135,000 479.000 $1.913,000 Total Operating Income $1,522,000 $1,691,000 Interest Expense 10,000 11,000 Earning before Income Taxes $1,512,000 $1,680,000 Income Taxes 529.000 588.000 Net Income $_983,000 S1,092.000 Current Assets Cash Marketable Securities Accounts Receivable Inventory Prepaid Expenses Total Current Assets $ 30,000 25,000 50.000 $ 105,000 SULLIVAN HOTELS CORPORATION Balance Sheet December 31, 2012 Current Liabilities $ 50,000 Wages Payable 30,000 Accounts Payable 40,000 Notes Payable 60,000 Total Current Liabilities 15.000 S 195.000 Long-term Debi Mortgage and LT Loans Total Long Term Debt $7,000,000 $7,000,000 Owners' Equity Common Stock (3,000,000 shares (S1 par)) Paid in Capital in excess of par Retained Earnings Total Owners' Equity $2.500.000 $2,500,000 Fixed Assets Net Fixed Assets Total Fixed Assets $3,000,000 500,000 1,090,000 $4,590,000 Total Assets $7.195.000 Total Liabilities and Owner's Equity $7.195.000