High Fashion Ltd. is a chain of high- end retailers of women's fashions. The chain currently has five locations in top malls in Toronto. High Fashion has been very popular because of its ability to get unique de signer fashions not available at any other Canadian store. The success of High Fashion is largely due to the entrepreneur who began the chain, Ellin Bessner, who is very skilled at identifying the tastes of her target market and getting exclusive deals with international and domestic designers. Since 2015, High Fashion has been growing, including adding one new store each year in 2015, 2016, and 2017. Ellin has invested more money in the business to finance the growth but she is almost out of her own money. Recently, Ellin approached the venture capital firm Dragon's Lair Inc. for a large loan. Ellin would like the money to expand her existing stores and expand into Mont real and Ottawa. Ellin has supplied financial statements for the last four years. Dragon's Lair is interested in investing in High Fashion. It's willing to lend the money but one of the terms of the loan agreement is that Dragon's Lair could convert the loan into a 20 percent stake in High Fashion within five years if it chooses to.
You are an analyst with Dragon's Lair. One of the principals of the firm has asked you to do an analysis of High Fashion's financial statements, evaluating its performance and liquidity over the last four years and assessing its suitability for a loan.

Ms. Bessner provides additional information:
€¢ All sales of merchandise to customers are for cash or major credit card. No credit terms are offered. High Fashion recognizes revenue at the time of sale.
€¢ All inventory is purchased on credit.
€¢ The long-term loan is from a private lender and must be repaid in full by 2020. High Fashion has been making payments on the loan since cash has been available to do so.
€¢ High Fashion has never paid dividends.

Required:
Prepare the reported requested by theprincipal.

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High Fashion Ltd. Balance Sheets as of December 31 2017 2016 2015 2014 Assets Cash Inventory Other current assets Total current assets Capital assets Accumulated depreciation $ 85,556 124,678 277,986 S 375,000 725,100 598,852 501,428 390,000 30,000 907,656 810,140 851,614 795,000 1,300,000 948,000 550,000 375,000 415,000) (291,000) 190,000) 112,500) $1,792,656 $1,467,140 $1,211,614 $1,057,500 97,000 86,610 72,200 Liabilities and Shareholders' equity Bank loan Accounts payable Other payables Current portion of long-term debt Total current liabilities Long-term debt Common shares Retained earnings 120,4 102,321 S 66,966 S 25,000 438,960 354,000 295,000 225,000 95,000 120,000 25,000 674,371 546,32 481,966 395,000 175,000 275,000 300,000 325,000 390,000 325,000 250,000 250,000 87,500 $1,792,656 $1,467,140 $1,211,614 S1,057,500 15,000 100,000 65,000 25,000 25,000 553285 320,819 179,648 High Fashion Lutd. Income Statements for the Years Ended December 31, 2017 2016 2015 2014 Revenue Cost of sales Gross margin Selling, general, and administrative $2,898,000 $2,520,000 $2,250,000 S1,750,000 1,556,226 1340,640 1,186,875 910,000 1,341,774 1,179,360 1,063,125 840,000 Interest expense Other expenses Income before taxes Income taxes Net income 972,279 7200 834,750 682,500 31,000 30,000 26,000 25,000 55,00070,00090,000 100,000 283,495 72,160 12,375 32,500 5,850 232,466 141,171 92,148 S 26,650 51,02930,98920,227