Using the financial statements provided: 1. Prepare a horizontal analysis of the balance sheet and income statement. 2. Prepare a vertical analysis of the balance sheet and the income statement. 3. Calculate the following ratios: 1. Current ratio 2. Average days to sell inventory 3. Average days to collect accounts receivable 4. Debt to assets ratio 5. Plant assets to long term debt 6. Return on investment 7. Return on assets 4. Write a paragraph summarizing your findings. A strategy that directs how businesses make decisions about how to grow and deploy finite resources in order to reach their worldwide goals. The firm's interational strategy dictates bow, where, and when its resources are used globally. This comprises deciding what products or services to provide, determining which markets to enter, and determining how to successfully compete for the offered products or services in the chosen market. It must be a multi-functional strategy that covers all of the many functions inside the company as well as the connections between them. To be effective, the company's international strategy must be consistent across all activities, goods, and services, as well as all operational international and regional locations, and react to a range of needs in the international environment. By delivering a greater rate of profit, international strategy allows the company to keep a competitive edge over its competitors. This is accomplished by outperforming its competitors in attractive activities. This is accomplished through improving skills and competences in the following areas: 1. Create values that buyers find desirable. 2. These abilities and skills are uncommon. 3. They're tough to duplicate or replace. 4. Allow the company to fully utilize the above-mentioned resources. Companies must be extremely agile and nimble in order to respond and react to the ever-changing circumstances in the business environment, whether locally or globally. I Milavec Company Horizontal Analysis MILAVEC COMPANY Comparative Income Statements For the Years Ending December 31 Percentage 2018 2017 Difference Sales $900,000 $800,000 +12.5% Cost of goods sold 610,000 480,000 +27.1 Gross margin 290,000 320,000 -9.4 Operating expenses 248,000 280.000 -11.4 Income before taxes 42,000 40,000 +5.0 Income taxes 17,000 18,000 -5.6 Net Income $ 25,000 $ 22,000 +13.6 "($900,000 - $800,000) = $800,000; all changes expressed as percentages of previous totals. Vertical Analysis of Income Statement In income statements, all items are usually expressed as a percentage of sales. EXHIBIT 9.4 MILAVEC COMPANY Vertical Analysis of Comparative Income Statements 2018 Percentage of Amount Sales Amount $900,000 100.0% $800,000 610.000 67.8 480,000 290,000 32.2 320,000 248.000 27.6 1280.000 42,000 4.7 40,000 17.000 1.9 18.000 $ 25,000 2.8% $ 22.000 2017 Percentage of Sales 100.0% 60.0 Sales Cost of goods sold Gross margin Operating expenses Income before taxes Income taxes Net income 40.0 35.0 5.0 2.3 2.8% Handout Template - Please Print Out from Canvas To Facilitate Your Understanding of the Ratio Calculations MILAVEC COMPANY Vertical Analysis of Comparative Balance Sh MILAVEC COMPANY Income Statements and Statements of 2018 2017 Retained Earnings Assets For the Years Ending December 31 Cash $ 20,000 $ 17,000 Marketable securities 20,000 22,000 2018 2017 Notes receivable 4,000 3,000 Accounts receivable Sales $900,000 50,000 56,000 $890,000 Merchandise inventory 70,000 43,000 Cost of goods sold Prepaid expenses 4.000 4.000 Beginning inventory 43,000 40,000 Total current assets 168,000 145,000 Purchases 637,000 483,000 Property, plant, and equipment 340,000 310.000 Goods available for sale 680,000 523,000 Total assets $508,000 $455,000 Ending inventory 70,000 43,000 Llabilities and Stockholders' Equity Cost of goods sold 610,000 Accounts payable 480.000 $ 40,000 $ 38,000 Salaries payable 2,000 3,000 Gross margin 290,000 320,000 Taxes payable 4,000 2.000 Operating expenses 248,000 280,000 Total current liabilities 46,000 43,000 Income before taxes 42,000 40,000 Bonds payable, 8% 100,000 100,000 Income taxes 17,000 18,000 Total abilities 146,000 143,000 Net Income Preferred stock 6% 5100 par 50,000 25,000 22,000 50,000 Common stock. $10 par 150.000 125,000 Plus: Retained earnings, Retained earnings 162,000 137,000 beginning balance 137,000 130,000 Total stockholders' equity 362,000 312.000 Less: Dividends 0 15,000 Total abilities and stockholders' equity $508,000 Retained earnings $455,000 ending balance $ 162,000 $137.000 "Percentages may not add exactly due to rounding Vertical Analysis of Balance Sheet In balance sheets, all items are usually expressed as a percentage of total assets. Pero of Total 3.75 43 07 123 95 03 EXHIBIT 9.5 MILAVEC COMPANY Viral Analysis of Companie Hatunce Sheets Percentage 2015 of Total 2017 Assets Cash 5. 20,000 3.93 $17.000 Marketable securities 20.000 39 22.000 Notes receivable 4.000 100D Accounts receivable 50.000 95 56.000 Merchandise inventory 70.000 400 Prepaid expenses -4000 Total current Com LUS Property, plant, and equipment 10 310000 Total assets SSOL.000 100.0 $55.000 Liabilities and Stockholders' Equity Accounts payable $10.000 798 SO Salanes payable 2000 2.000 Taxes payable Total current liabilities 46.000 9.1 Bonds payables 12000 Total abilities Preferred stock 6. S10 50.000 125 150.000 Common stock, Siop Reamed urn Total stockholders equity 16 Totalities and So 200 MI khoe quify S4200 100 | EEEE -er: Using the financial statements provided: 1. Prepare a horizontal analysis of the balance sheet and income statement. 2. Prepare a vertical analysis of the balance sheet and the income statement. 3. Calculate the following ratios: 1. Current ratio 2. Average days to sell inventory 3. Average days to collect accounts receivable 4. Debt to assets ratio 5. Plant assets to long term debt 6. Return on investment 7. Return on assets 4. Write a paragraph summarizing your findings. A strategy that directs how businesses make decisions about how to grow and deploy finite resources in order to reach their worldwide goals. The firm's interational strategy dictates bow, where, and when its resources are used globally. This comprises deciding what products or services to provide, determining which markets to enter, and determining how to successfully compete for the offered products or services in the chosen market. It must be a multi-functional strategy that covers all of the many functions inside the company as well as the connections between them. To be effective, the company's international strategy must be consistent across all activities, goods, and services, as well as all operational international and regional locations, and react to a range of needs in the international environment. By delivering a greater rate of profit, international strategy allows the company to keep a competitive edge over its competitors. This is accomplished by outperforming its competitors in attractive activities. This is accomplished through improving skills and competences in the following areas: 1. Create values that buyers find desirable. 2. These abilities and skills are uncommon. 3. They're tough to duplicate or replace. 4. Allow the company to fully utilize the above-mentioned resources. Companies must be extremely agile and nimble in order to respond and react to the ever-changing circumstances in the business environment, whether locally or globally. I Milavec Company Horizontal Analysis MILAVEC COMPANY Comparative Income Statements For the Years Ending December 31 Percentage 2018 2017 Difference Sales $900,000 $800,000 +12.5% Cost of goods sold 610,000 480,000 +27.1 Gross margin 290,000 320,000 -9.4 Operating expenses 248,000 280.000 -11.4 Income before taxes 42,000 40,000 +5.0 Income taxes 17,000 18,000 -5.6 Net Income $ 25,000 $ 22,000 +13.6 "($900,000 - $800,000) = $800,000; all changes expressed as percentages of previous totals. Vertical Analysis of Income Statement In income statements, all items are usually expressed as a percentage of sales. EXHIBIT 9.4 MILAVEC COMPANY Vertical Analysis of Comparative Income Statements 2018 Percentage of Amount Sales Amount $900,000 100.0% $800,000 610.000 67.8 480,000 290,000 32.2 320,000 248.000 27.6 1280.000 42,000 4.7 40,000 17.000 1.9 18.000 $ 25,000 2.8% $ 22.000 2017 Percentage of Sales 100.0% 60.0 Sales Cost of goods sold Gross margin Operating expenses Income before taxes Income taxes Net income 40.0 35.0 5.0 2.3 2.8% Handout Template - Please Print Out from Canvas To Facilitate Your Understanding of the Ratio Calculations MILAVEC COMPANY Vertical Analysis of Comparative Balance Sh MILAVEC COMPANY Income Statements and Statements of 2018 2017 Retained Earnings Assets For the Years Ending December 31 Cash $ 20,000 $ 17,000 Marketable securities 20,000 22,000 2018 2017 Notes receivable 4,000 3,000 Accounts receivable Sales $900,000 50,000 56,000 $890,000 Merchandise inventory 70,000 43,000 Cost of goods sold Prepaid expenses 4.000 4.000 Beginning inventory 43,000 40,000 Total current assets 168,000 145,000 Purchases 637,000 483,000 Property, plant, and equipment 340,000 310.000 Goods available for sale 680,000 523,000 Total assets $508,000 $455,000 Ending inventory 70,000 43,000 Llabilities and Stockholders' Equity Cost of goods sold 610,000 Accounts payable 480.000 $ 40,000 $ 38,000 Salaries payable 2,000 3,000 Gross margin 290,000 320,000 Taxes payable 4,000 2.000 Operating expenses 248,000 280,000 Total current liabilities 46,000 43,000 Income before taxes 42,000 40,000 Bonds payable, 8% 100,000 100,000 Income taxes 17,000 18,000 Total abilities 146,000 143,000 Net Income Preferred stock 6% 5100 par 50,000 25,000 22,000 50,000 Common stock. $10 par 150.000 125,000 Plus: Retained earnings, Retained earnings 162,000 137,000 beginning balance 137,000 130,000 Total stockholders' equity 362,000 312.000 Less: Dividends 0 15,000 Total abilities and stockholders' equity $508,000 Retained earnings $455,000 ending balance $ 162,000 $137.000 "Percentages may not add exactly due to rounding Vertical Analysis of Balance Sheet In balance sheets, all items are usually expressed as a percentage of total assets. Pero of Total 3.75 43 07 123 95 03 EXHIBIT 9.5 MILAVEC COMPANY Viral Analysis of Companie Hatunce Sheets Percentage 2015 of Total 2017 Assets Cash 5. 20,000 3.93 $17.000 Marketable securities 20.000 39 22.000 Notes receivable 4.000 100D Accounts receivable 50.000 95 56.000 Merchandise inventory 70.000 400 Prepaid expenses -4000 Total current Com LUS Property, plant, and equipment 10 310000 Total assets SSOL.000 100.0 $55.000 Liabilities and Stockholders' Equity Accounts payable $10.000 798 SO Salanes payable 2000 2.000 Taxes payable Total current liabilities 46.000 9.1 Bonds payables 12000 Total abilities Preferred stock 6. S10 50.000 125 150.000 Common stock, Siop Reamed urn Total stockholders equity 16 Totalities and So 200 MI khoe quify S4200 100 | EEEE -er