You will use this Excel workbook with two worksheets to assist you in completing this part of the assignment. This Excel workbook is to be submitted with your paper. The first worksheet is the Balance Sheet and Income Statement for ABC Company. You will use the information to complete the assignment. The second worksheet contains a breakdown of categories of ratios where you will complete the calculations for each ratio. You will also enter the formula written out as to what information you have used to do the calculations. You are going to use the five classifications of financial ratios to assess the financial performance of ABC Company. Team Responsibilities A team member is typically assigned one of the five classifications (i.e., student A will be responsible for liquidity, student B will be responsible for activity, and so on). You will present a definition of the classification by citing the course text and other scholarly sources. The team leader (compiler of all member analyses) may need to be assigned a classification as well; team size will dictate this. Your paper, based upon your teams collective analysis, should include a measure of and analysis of financial outcomes based on the ratios for each financial ratio classification (i.e., the liquidity classifications of ratios are based upon the quick and current ratio outcomes). You will calculate ratios for each classification for the 3 years of data (i.e., the current ratio may have been 1.5 the first year, 1.35 the second year, and .75 in the most recent year). It is based on these results that you will measure financial performance, or trends, from one year to the next. It is imperative that the ratios-numbers, and quantitative outcomes, support your analysis. Using the data from the Income Statement and Balance Sheet, provide the correct calculation of the liquidity ratios and an assessment of the companys ability to maintain liquidity and the management of current assets and current liabilities. Include the proper assessment of outcomes as positive or negative trends when all ratio outcomes are factored as a group. Liquidity Ratios Current Ratio Quick Ratio Using the data from the Income Statement and Balance Sheet, provide the correct calculation of the activity ratios and an assessment of the companys ability to maintain liquidity. Include the proper assessment of outcomes as positive or negative trends when all four ratio outcomes are factored as a group. Activity Ratios Inventory Turnover Accounts Receivables Turnover Total Asset Turnover Average Collection Period Using the data from the Income Statement and Balance Sheet, provide the correct calculation of the financing ratios. Include the proper assessment of outcomes as positive or negative trends when all three ratio outcomes are factored as a group. Financing Ratios Debt Ratio Debt-to-Equity Ratio Times Interest Earned Ratio Using the data from the price per share data, the Income Statement, and the Balance Sheet, provide the correct calculation for the market value ratios below. Market Value Ratios Earnings per Share (EPS) Price Earnings (PE) Using the data from the Income Statement and Balance Sheet, provide the correct calculation of these four profitability ratios and an assessment of the companys ability to maintain if not improve profitability based on the amounts of equity, assets, and levels of profits from sales. Include the proper assessment of outcomes as positive or negative trends when all four ratio outcomes are factored as a group. Profitability Ratios Return on Equity (ROE) Return on Assets (ROA) Net Profit Margin Operating Profit Margin Part 2 In this part of your assignment, you will compose an analytical study reporting your results from Part 1. The CEO of your company is forming a task force to review the financials and present a review for acquisition of ABC Company. Based on ABCs previous 3 years of financials, determine if this would be a good acquisition. You must form the task force to complete the task. The CEO would like most of the departments to participate in the process. Using each departments area of expertise, what information would each of the following departments contribute to the final decision? Provide a minimum one-paragraph response for each department. Finance Department Sales Department Marketing Department Human Resources Legal Department Part 3 After your team has provided their input on the effect the acquisition will have on their department, perform an overall analysis to explain your recommendation to the CEO. Your analysis should include the following: Explain how the company is trending based on the year-over-year ratios. Compare the company to the industry average in Appendix A in the Excel workbook in areas of profitability, management effectiveness, and efficiency. Based on the above, summarize the pros and cons of ABC Company using both the year-over-year ratio analysis from Part 1 and the industry average comparisons from Part 3. Provide the teams final recommendation as to whether or not the CEO should invest in ABC Company.

A B ABC Company Income Statement Period Ending Total Sales Cost of Goods Sold Gross Profit Selling Generall and Adminstrative Operating Profit Total Other Income/Expenses Net Earnings before Interest and Taxes Interest Expense Income Before Tax Income Tax Expense Net Income from Continuing Ops Discontinued Operations Net Income (Net Profit) 14,000,000 Shares outstanding Market Share price per share Market Share price per share ABC Company Balance Sheet Period Ending Assets Current Assets Cash and Cash Equivalents Net Receivables Inventory Other Current Assets Total Current Assets Property Plant and Equipment Goodwill Other Assets Total Assets 31-Dec-15 $485,651,000 365,086,000 120,565,000 93,418,000 27,147,000 113,000 27,034,000 2,461,000 24,573,000 7,985,000 16,588,000 285,000 $16,303,000 $10.00 G H 31-Dec-14 $476,294,000 358,069,000 118,225,000 91,353,000 26,872,000 119,000 26,753,000 2,335,000 24,418,000 8,105,000 16,313,000 144,000 $16,169,000 $9.00 31-Dec-13 $475,210,000 350,400,000 124,810,000 90,343,000 34,467,000 115,000 34,352,000 2,200,000 32,152,000 9,800,000 22,352,000 182,000 $22,170,000 M N $8.50 4 \begin{tabular}{|r|r|r|} \hline 2015 & \multicolumn{1}{|c|}{2014} & \multicolumn{1}{|c|}{2013} \\ \hline & & \\ \hline $9,135,000 & $7,281,000 & $6,789,000 \\ \hline 6,778,000 & 6,677,000 & 6,525,000 \\ \hline 2,224,000 & 2,369,000 & 2,199,000 \\ \hline 63,278,000 & 61,185,000 & 59,502,000 \\ \hline 116,655,000 & 117,907,000 & 120,300,000 \\ \hline 18,102,000 & 19,510,000 & 17,900,000 \\ \hline 5,671,000 & 6,149,000 & 4,500,000 \\ \hline 203,706,000 & 204,751,000 & 202,202,000 \\ \hline & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline & 2015 & 2014 & 2013 \\ \hline \multicolumn{4}{|l|}{ Current Liabilities } \\ \hline Accounts Payable & 58,583,000 & 57,174,000 & 56,210,000 \\ \hline Other current Liabilities & & 89,000 & 55,000 \\ \hline Short-term Debt & 6,689,000 & 12,082,000 & 14,050,000 \\ \hline Total Current Liabilities & 65,272,000 & 69,345,000 & 70,315,000 \\ \hline Long-term Debt & 43,692,000 & 44,559,000 & 45,324,000 \\ \hline Deferred Long-term Liability charges & 8,805,000 & 8,017,000 & 13,553,000 \\ \hline Monority Interest & 4,543,000 & 5,084,000 & 6,875,000 \\ \hline Total Liabilities & 122,312,000 & 127,005,000 & 136,067,000 \\ \hline Miscellaneous Stock Options Warran & 0 & 0 & 0 \\ \hline Common Stock & 323,000 & 323,000 & 323,000 \\ \hline Retained Earnings & 85,777,000 & 76,566,000 & 65,750,000 \\ \hline Captial Surplus & 2,462,000 & 2,362,000 & 2,262,000 \\ \hline Other Stockholders Equity & 7,168,000 & 1,505,000 & 2,200,000 \\ \hline Total Stockholders Equity & 81,394,000 & 77,746,000 & 66,135,000 \\ \hline Total Liabilities \& Stockholders Equity & 203,706,000 & 204,751,000 & 202,202,000 \\ \hline \# of Shares Outstanding & 14,000,000 & 14,000,000 & 14,000,000 \\ \hline Market share price per share & $10.00 & $9.00 & $8.50 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline & 2015 & 2014 & 2013 \\ \hline \multicolumn{4}{|l|}{ Current Liabilities } \\ \hline Accounts Payable & 58,583,000 & 57,174,000 & 56,210,000 \\ \hline \multicolumn{2}{|c|}{ Other current Liabilities } & 89,000 & 55,000 \\ \hline Short-term Debt & 6,689,000 & 12,082,000 & 14,050,000 \\ \hline \multicolumn{2}{|c|}{ Total Current Liabilities } & 69,345,000 & 70,315,000 \\ \hline Long-term Debt & 43,692,000 & 44,559,000 & 45,324,000 \\ \hline Deferred Long-term Liability charges & 8,805,000 & 8,017,000 & 13,553,000 \\ \hline Monority Interest & 4,543,000 & 5,084,000 & 6,875,000 \\ \hline Total Liabilities & 122,312,000 & 127,005,000 & 136,067,000 \\ \hline \multicolumn{2}{|c|}{ Miscellaneous Stock Options Warran } & 0 & 0 \\ \hline Common Stock & 323,000 & 323,000 & 323,000 \\ \hline Retained Earnings & 85,777,000 & 76,566,000 & 65,750,000 \\ \hline Captial Surplus & 2,462,000 & 2,362,000 & 2,262,000 \\ \hline Other Stockholders Equity & 7,168,000 & 1,505,000 & 2,200,000 \\ \hline Total Stockholders Equity & 81,394,000 & 77,746,000 & 66,135,000 \\ \hline Total Liabilities \& Stockholders Equity & 203,706,000 & 204,751,000 & 202,202,000 \\ \hline \# of Shares Outstanding & 14,000,000 & 14,000,000 & 14,000,000 \\ \hline Market share price per share & $10.00 & $9.00 & $8.50 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|} \hline 1. & Ratio Calculations & & & & \\ \hline 2 & & 2015 & 2014 & 2013 & Formula Used (Write out formulas) \\ \hline 3 & Liquidity Ratios & & & & \\ \hline 4 & Current Ratio & 0.9695 & 0.8823 & 0.8462 & current assest/ current liability \\ \hline 5 & Quick Ratio & 0.2779 & 0.2354 & 0.2206 & (current assets- inventory)/ current liabilites \\ \hline 6 & & & & & \\ \hline 7 & Activity Ratios & & & & \\ \hline 8 & Inventory Turnover & 2.0283 & 2.0151 & 7.9656 & COGS/ inventory \\ \hline 9 & Accounts Recievables Turnover & 18.0472 & 18.0387 & 72.8291 & annual credit sales/ accounts receivable \\ \hline 10 & Total Asset Turnover & 0.5945 & 0.5852 & 2.3502 & sales/total assets \\ \hline 11. & Average Collection Period & 5.0562 & 5.0586 & 5.0117 & accounts receivable/(annual credit sales/365 days)= accounts receivable/ daily credit sales \\ \hline 12 & & & & & \\ \hline 13. & Financing Ratios & & & & \\ \hline 14 & Debt Ratio & 0.6004 & 0.6203 & 0.6729 & total liabilities/ total assets \\ \hline 15 & Debt-to-Equity Ratio & 1.5027 & 1.6336 & 2.0574 & total debet/total shareholder equity \\ \hline 16 & Times Interest Earned Ratio & 10.9850 & 11.4574 & 15.6145 & EBIT/ interest expense \\ \hline 17 & & & & & \\ \hline 18 & Market Ratios & & & & \\ \hline 19 & Earnings per Share (EPS) & 1.16450 & 1.15493 & 1.58357 & (net income-dividend payments)/ average outstanding share \\ \hline 20 & Price Earnings ( PE) & 8.62069 & 7.82609 & 5.37975 & market price per share/ earnings per share \\ \hline 21 & & & & & \\ \hline 22 & Profitability Ratios & & & & \\ \hline 23 & Return on Equity (ROE) & 20.03% & 20.80% & 33.52% & net income/common equity \\ \hline 24 & Return on Assets (ROA) & 13.27% & 13.07% & 16.99% & EBIT / total assets \\ \hline 25 & Net Profit Margin & 3.36% & 3.39% & 4.67% & net income/ sales \\ \hline 26 & Operating Profit Margin & 5.59% & 5.64% & 7.25% & EBIT/ sales \\ \hline \end{tabular}