XPlore Inc., a biotechnology company, supplies financial information for both years 2019 and 2020 (all the numbers, except for share data, are shown in thousands of dollars). Estimated cost of capital for all its financing is 10,5%.

XPlore Inc. Income statements ($ in thousands)

2019 2020

Sales $5130 $4,850

Cost of goods sold (3,330) (3,240)

Gross profits $1,800 $1,620

Operating expenses:

Selling and G&A expenses $(738) $(702)

Depreciation expenses (306) (450

) Total operating expenses $(1,044) $(1,152)

Operating profits $756 $468

Interest expense (180) (248)

Earnings before taxes $576 $221 I

ncome taxes (207) (59)

Net Income $369 $162

XPlore Inc. Balance Sheets ($ in thousands)

ASSETS 2019 2020

Cash $270 $446

Accounts receivable 630 824

Inventories 540 702

Other current assets 113 144

Total current assets $1,553 $2,115

Gross fixed assets $4,185 $4,455

Accumulated depreciation (1,530) (1,980)

Net fixed assets $2,655 $2,475

Total assets $4,208 $4,590

LIABILITIES (DEBT) AND EQUITY

Accounts payable $360 $576

Short-term notes payable 225 270

Total current liabilities $585 $846

Long-term debt 1,125 1,193

Total liabilities $1,710 $2,039

Common equity:

Common stock (par & paid in capital) $990 $990

Retained earnings 1,508 1,562

Total common equity $2,498 $2,552

Total liabilities and equity $4,208 $4,590

XPlore Inc. Additional information:

Number of common shares outstanding: 135 135

Dividends paid to stockholders $108 $108

Market price per share $32,40 $16,20

Based on the topics learnt in class prepare a financial analysis of XPlore Inc. and its financial performance, comparing the firms performance between 2 years.

For your analysis and evaluation, please consider the following:

a) computation common sized income statements for both years (10 points)

b) computation common sized balance sheets for both years (10 points)

c) computation of applicable financial ratios (20 points) (Current ratio, Acid-test ratio, Days in receivables, Days in inventory, Operating return on assets, Operating profit margin, Total asset turnover Fixed asset turnover, Debt ratio, Times interest earned, Return on equity)

d) computation price/earnings ratios and market/book ratios (10 points)

e) Interpret your results briefly, what would you recommend to XPlores management? (10 points)

All percentages should be rounded to the second decimal place