For each of Anne Schippel's observations listed below, develop questions you would ask Dry Supply in order to complete the balance sheet analysis.

Observation 1: Accounts receivable have remained in the $114,000 to $118,000 range

**I can't get the right formula to get this percentages. Please show me what I am missing.

Accounts Receivable:

Increase in Accounts

receivable is 3.5% in year 2 and 2.6% in year 3. This

corresponds to increase in sales;

sales increase in Year 2

is 4.6% and increase in year 3 is 2.6%

- When

investment in fixed assets in year 2 has increased by 8.89%,

why this has not translated into similar increase in sales?

Common-sized report

($ in $000S) Review 12/31/20xx Review 12/31/20xy Review 12/31/20xz

Assets	Amount	%	Amount	%	Amount	%
Cash	$3	1.2	$ 12	4.6	$ 22	8.1
Accounts Receivable	114	46.9	118	45.4	117	43.3
Less:Allowance for doubtful accounts	5	2.1	5	1.9	5	1.9
Net Accounts Receivable	109	44.9	113	43.5	112	41.5
Inventory	73	30	72	27.7	67	24.8
Total Current Assets	185	76.1	197	75.8	201	74.4
Furniture and fixtures	76	31.3	75	28.8	78	28.9
Leasehold Improvements	1	.4	1	.4	0	0.0
Transportation Equipment	53	218	70	26.9	85	31.5
Gross Fixed Assets	130	53.5	146	56.2	163	60.4
Less: Accum. Depreciation	85	35	97	37.3	110	40.7
Net Fixed Assets	45	18.5	49	18.8	53	19.6
Cash-Value Life Insurance	13	5.3	14	5.4	16	5.9
Total Assets	$243	100	$260	100	$270	100

Review 12/31/20xx Review 12/31/20xy Review 12/31/20xz

Liabilities	Amount	%	Amount	%	Amount	%
Notes Payable bank short- term	$81	33.3	$68	26.2	$59	21.8
Accounts payable-trade	42	17.3	46	17.7	31	11.5
Income taxes payable	5	2.1	6	2.3	7	2.6
Accrued bonuses	10	4.1	11	4.2	12	4.4
Total current liabilities	138	56.8	131	50.4	109	40.4
Subordinated debt officers	48	19.8	58	22.3	67	24.8
Total liabilities	186	76.5	189	72.7	176	65.2
Net Worth
Common stock	2	0.8	2	.8	2	.7
Retained earnings	55	22.6	69	26.5	92.	34.1
Total net worth	57	23.5	71	27.3	94	34.8
Total liabilities and net worth	243	100	260	100	270	100

Income Statement Spread: DRY SUPPLY

Review 20xx Review 20xy Review 20xz

	Amount	%	Amount	%	Amount	%
Net sales	895	100	937	100	918	100
Costs of goods sold	645	72.1	667	71.2	631	68.7
Gross profit	250	27.9	270	28.8	287	31.3
Selling, Gen. And admin. Expense	157	17.5	173	18.5	180	19.6
Officer's compensation	36	4	31	3.3	28	3.1
Rent Expenses	15	1.7	18	1.9	20	2.2
Bad Debt Expense	2	.2	1	.1	0	0
Profit sharing expense	7	.8	7	.7	0	0
Depreciation Expense	12	1.3	12	1.3	13	1.4
Total operating expense	229	25.6	242	25.8	241	26.3
Operating income	21	2.3	28	3.	46	5
Other income	0	0	0	0	0	0
Interest income	2	.2	2	.2	2	.2
Rental income	3	.3	3	.3	3	.3
Interest expense	6	.7	7	.7	11	1.2
Net profit before tax	20	2.2	26	2.8	40	4.4
Taxes	11	1.2	12	1.3	17	1.9
Net profit after tax	9	1	14	1.5	23	2.5

Answer rating: 100% (QA)

Here are some questions I would ask Dry Supply regarding Anne Schippels observations on the balance ... View the full answer