Question

Financial StatementAnalysis

a. Within this workbook there is a worksheet labeled "AdjustedTrial Balances". Within that worksheet you will find fullycompleted trial balances for three years. Also within this workbookyou will find worksheets for comparative income statements andcomparative balance sheets. Using the trial balances andcomparative financial statements you need to calculate a variety ofratios. You will find the required ratios in the worksheet labeled"Ratios Historical". Complete all the required ratios. You MUST useformulas and/or linking to compute your ratios. You can not simplyhard key the answers. You must reference the appropriate data fromthe trial balances and comparative financial statements.

		December 31, 2015		December 31, 2014		December 31, 2013		December 31, 2012		May 31, 2015
		Adjusted		Adjusted		Adjusted		Adjusted		Adjusted
		Trial Balance		Trial Balance		Trial Balance		Trial Balance		Trial Balance
Acct. No.	Account Title	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.
100	Cash	294,000	0	311,640	0	342,804	0	373,656	0	75,000
102	Accounts Receivable	948,800	0	846,728	0	931,401	0	1,015,227	0	490,000
103	Allowance for Doubtful Accounts	0	16,800	0	17,808	0	19,589	0	21,352		15,000
104	Merchandise Inventory	601,856	0	637,967	0	701,764	0	764,923	0	334,000
105	Office Supplies	2,240	0	2,374	0	2,612	0	2,847	0	2,000
106	Prepaid Insurance	15,680	0	16,621	0	18,283	0	20,111	0	14,000
140	Land	2,000,600	0	2,000,600	0	2,000,600	0	2,000,600	0	2,000,600
145	Building	1,500,000		1,500,000		1,500,000		1,500,000		1,500,000
146	Accumulated Depreciation - Building		1,500,000		1,500,000		1,500,000		1,500,000		1,500,000
151	Equipment & Furniture - Warehouse	11,200	0	11,872	0	13,059	0	14,235	0	10,000
152	Accumulated Depreciation - Equip & Furn. - Warehouse	0	2,128	0	2,256	0	2,481	0	2,705		1,900
153	Equipment & Furniture - Office	9,520	0	10,091	0	11,100	0	12,099	0	8,500
154	Accumulated Depreciation - Equip & Furn. - Office	0	1,792	0	1,900	0	2,089	0	2,278		1,600
201	Accounts Payable	0	812,432	0	861,178	0	947,296	0	978,338		948,600
202	Wages Payable	0	0	0	0	0	0	0	0		0
203	Interest Payable	0	0	0	0	0	0	0	0		0
204	Dividends Payable	0	0	0	0	0	0	0	0		0
205	Unearned Rent	0	0	0	0	0	0	0	0		0
250	Notes Payable	0	0	0	0	0	0	0	0		0
251	Bonds Payable	0	0	0	0	0	0	0	0		0
252	Mortgage (Warehouse) Payable	0	124,000	0	131,440	0	144,584	0	157,597		200,000
300	Common Stock, $1 Par, 100,000 Authorized; 60,000 sharesIssued/Outstanding	0	65,000	0	65,000	0	65,000	0	65,000		60,000
301	Paid In Capital - Excess of Par	0	1,545,000	0	1,545,000	0	1,545,000	0	1,545,000		1,341,000
330	Retained Earnings	0	1,166,744		1,065,744		956,030		1,238,479		366,000
340	Treasury Stock	0	0	0	0	0	0	0	0	0
500	Sales	0	8,850,000	0	8,874,000	0	9,051,480	0	9,141,995		725,000
510	Sales Discounts	0	0	0	0	0	0	0	0	0
511	Sales Returns & Allowances	0	0	0	0	0	0	0	0	0
600	Cost of Goods Sold	7,656,000	0	7,661,551	0	7,625,748	0	7,852,006	0	638,000
700	Wage Expense (hourly workers)	120,000	0	122,400	0	124,848	0	126,096	0	10,000
701	Salaries Expense (Exempt Staff)	360,000	0	367,200	0	374,544	0	378,289	0	30,000
702	Marketing Expense	288,000	0	293,760	0	299,635	0	302,632	0	24,000
703	Travel and Entertainment Expense	27,600	0	28,152	0	28,715	0	29,002	0	2,300
704	Bad Debt Expense	0	0	0	0	0	0	0	0	0
705	Property Tax Expense	0	0	0	0	0	0	0	0	0
706	Office Maintenance & Repair Expense	6,000	0	6,120	0	6,242	0	6,305	0	500
707	Legal Expenses	198,600	0	202,572	0	206,623	0	208,690	0	16,550
708	Insurance Expense	24,000	0	24,480	0	24,970	0	25,219	0	2,000
709	Utilities Expense	12,000	0	12,240	0	12,485	0	12,610	0	1,000
710	Office Supplies Expense	3,480	0	3,550	0	3,621	0	3,657	0	290
711	Telecommunications Expense	660	0	673	0	687	0	694	0	55
712	Depreciation Expense - Equip & Furniture - Warehouse	1,980	0	2,020	0	2,060	0	2,081	0	165
713	Depreciation Expense - Equip & Furniture - Office	1,680	0	1,714	0	1,748	0	1,765	0	140
800	Rent Income	0	0	0	0	0	0	0	0	0
900	Interest Expense	0	0	0	0	0	0	0	0	0
	Total	14,083,896	14,083,896	14,064,325	14,064,325	14,233,549	14,233,549	14,652,743	14,652,743	5,159,100	5,159,100
Variance		0		0		0		0		0

AC Speed
Income Statement
	12/31/15		12/31/14		12/31/13		12/31/12		5/31/15
Sales Revenue
Sales	8,850,000		8,874,000		9,051,480		9,141,995		725,000
Less: Sales Returns & Allowances	0		0		0		0		0
Sales Discounts	0		0		0		0		0
Net Sales	8,850,000		8,874,000		9,051,480		9,141,995		725,000
Cost of Goods Sold	7,656,000		7,661,551		7,625,748		7,852,006		638,000
Gross Profit	1,194,000		1,212,449		1,425,732		1,289,989		87,000
Operating Expenses
Wage Expense (hourly workers)	120,000		122,400		124,848		126,096		10,000
Salaries Expense (Exempt Staff)	360,000		367,200		374,544		378,289		30,000
Marketing Expense	288,000		293,760		299,635		302,632		24,000
Travel and Entertainment Expense	27,600		28,152		28,715		29,002		2,300
Bad Debt Expense	0		0		0		0		0
Property Tax Expense	0		0		0		0		0
Office Maintenance & RepairExpense	6,000		6,120		6,242		6,305		500
Legal Expenses	198,600		202,572		206,623		208,690		16,550
Insurance Expense	24,000		24,480		24,970		25,219		2,000
Utilities Expense	12,000		12,240		12,485		12,610		1,000
Office Supplies Expense	3,480		3,550		3,621		3,657		290
Telecommunications Expense	660		673		687		694		55
Depreciation Expense - Equip &Furniture - Warehouse	1,980		2,020		2,060		2,081		165
Depreciation Expense - Equip &Furniture - Office	1,680		1,714		1,748		1,765		140
Total Operating Expenses	1,044,000		1,064,880		1,086,178		1,097,039		87,000
Operating Income	150,000		147,569		339,554		192,950		0
Other Revenues & Gains
Rent Income	0		0		0		0		#REF!
	0		0		0		0		#REF!
Other Expenses & Losses
Interest Expense	0		0		0		0		0
	0		0		0		0		0
Net Income	150,000		147,569		339,554		192,950		#REF!
Common Dividends	19,200		16,130		15,000		1,600
Weighted Average Common Shares	65,000		65,000		65,000		62,500
Market Price per Common Share	35.00		34.00		31.00		34.00

AC Speed
Balance Sheet
	12/31/15	1/0/00	12/31/14	1/0/00	12/31/13	1/0/00	12/31/12	1/0/00	5/31/15
ASSETS
Current Assets
Cash	294,000		311,640		342,804		373,656		75,000
Accounts Receivable	948,800		846,728		931,401		1,015,227		490,000
Less: Allowance for Doubtful Accounts	16,800		17,808		19,589		21,352		15,000
Net Accounts Receivable	932,000		828,920		911,812		993,875		475,000
Merchandise Inventory	601,856		637,967		701,764		764,923		334,000
Office Supplies	2,240		2,374		2,612		2,847		2,000
Prepaid Insurance	15,680		16,621		18,283		20,111		14,000
Total Current Assets	1,845,776		1,797,523		1,977,275		2,155,412		900,000
Long-Term Assets
Land	2,000,600		2,000,600		2,000,600		2,000,600		2,000,600
Equipment & Furniture - Warehouse	11,200		11,872		13,059		14,235		10,000
Accumulated Depreciation - Equip &Furn. - Warehouse	2,128		2,256		2,481		2,705		1,900
Book Value: Equipment & Furniture -Warehouse	9,072		9,616		10,578		11,530		8,100
Equipment & Furniture - Office	9,520		10,091		11,100		12,099		8,500
Accumulated Depreciation - Equip &Furn. - Office	1,792		1,900		2,089		2,278		1,600
Book Value: Equipment & Furniture -Office	7,728		8,192		9,011		9,822		6,900
Total Long-Term Assets	2,017,400		2,018,408		2,020,189		2,021,952		2,015,600
TOTAL ASSETS	3,863,176		3,815,931		3,997,464		4,177,364		2,915,600
LIABILITIES
Current Liabilities
Accounts Payable	812,432		861,178		947,296		978,338		948,600
Wages Payable	0		0		0		0		0
Interest Payable	0		0		0		0		0
Dividends Payable	0		0		0		0		0
Unearned Rent	0		0		0		0		0
Total Current Liabilities	812,432		861,178		947,296		978,338		948,600
Long-Term Liabilities
Notes Payable	0		0		0		0		0
Bonds Payable	0		0		0		0		0
Mortgage (Warehouse) Payable	124,000		131,440		144,584		157,597		200,000
Total Long-Term Liablities	124,000		131,440		144,584		157,597		200,000
TOTAL LIABILITIES	936,432		992,618		1,091,880		1,135,935		1,148,600
STOCKHOLDER'S EQUITY
Paid-in Capital
Capital Stock	65,000		65,000		65,000		65,000		60,000
Additional Paid-in Capital	1,545,000		1,545,000		1,545,000		1,545,000		1,341,000
Retained Earnings	1,316,744		1,213,313		1,295,584		1,431,429		#REF!
Total Paid-in Capital & RetainedEarnings	2,926,744		2,823,313		2,905,584		3,041,429		#REF!
TOTAL LIABILITIES & CAPITAL	3,863,176		3,815,931		3,997,464		4,177,364		#REF!
TOTAL ASSETS	3863176		3815930.56		3997463.616		4177364.17		2915600
TOTAL LIAB & EQUITY	3863176		3815930.92		3997464.092		4177363.81		#REF!
VARIANCE	0		-0.36		0		0		#REF!

	12/31/15		12/31/14		12/31/13		INDUSTRY
Liquidity
Current Ratio (One decimal place)			2.1		2.1		2.2
Current Assets
Current Liabilities
Acid Test Ratio (One decimal place)			1.3		1.3		1.6
Cash
A/R (Net)
Short Term Investments
Current Liabilities
Receivables Turnover (One decimalplace)			10.2		9.5		10
Net Credit Sales
Beg A/R
End A/R
Avg. A/R
Inventory Turnover (One decimalplace)			11.4		10.4		9.5
CGS
Avg. Inventory
Profitability
Profit Margin (% with two decimalplaces)			1.66%		3.75%		3.5%
Net Income
Net Sales
Asset Turnover (two decimal places)			2.27		2.21		1.9
Net Sales
Beginning Assets
Ending Assets
Average Assets
Return on Assets (% one decimalplace)			3.8%		8.3%		10.5%
Net Income
Avg. Assets
Return on Common Shareholders' Equity
(One decimal place)			5.2%		11.4%		18.3%
Net Income
Preferred Dividends
Beginning Common Equity
Ending Common Equity
Avg. Common Shareholders' Equity
Earnings per Share (EPS) (Two decimalplaces)			2.27		5.33		3.05
Net Income
Preferred Dividends
Weighted Avg. Common SharesOutstanding
Price-Earnings (P/E ) Ratio (Two decimalplaces)			14.98		5.93		14.8
Market Price per Share of Stock
Earnings per Share
Payout Ratio (% One decimal place)			10.9%		4.4%		15.0%
Cash Dividends
Net Income
Solvency Ratios
Debt to Total Assets Ratio (% One decimalplace)			26.0%		27.3%		42.2%
Total Debt
Total Assets
	Dec. 31, 2010		Dec. 31, 2009		Dec. 31, 2008
Common Dividends	19,200		16,130		15,000
Weighted Average Common Shares	65,000		65,000		63,750
Market Price per Share	35		34		31