Your client is considering investing in ShoeMass Enterprises. The company has only been around for a...

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Your client is considering investing in ShoeMass Enterprises. The company has only been around for a few years, but is actively looking to expand operations-thus the need for a new round of investments. After reviewing the financial documentation, you'll need to decide on your final advice for your client. By answering the following questions, you'll be able to arrive at your recommendation. 1. Your client has gotten burned on some start-ups before they couldn't keep the lights on. He's also very concerned about the fickle nature of consumer taste in retail. Are you confident in the short-term outlook for ShoeMass? The typical industry standard for liquidity is 2:1. a. Explain your rationale with proper documentation. 2. Beyond the short-term liquidity outlook, your client likes to see frugal companies who save their money prudently and grow operations through internal sources rather than debt markets. Is ShoeMass a good fit here? a. Think about the financing 3. options for companies-which way has ShoeMass leaned in the past to grow? Over the course of FY 2021, ShoeMass earned $90,000 in net income on $300,000 of revenue. Your client really values efficiency and profitability-they want to put their investment dollars to the most productive use, and they think healthy margins are the key to sustained success. Understanding that typical retail margins are 15% and that he has a separate investment opportunity with a company that is showing returns on equity of 8% annually, does ShoeMass check this box off? 4. What's your final recommendation? ShoeMass Balance Sheet (In thousands of 2021 $) Current Assets Cash Inventory Accounts Receivable Pre-paid expenses Current Assets Total Fixed Assets Property and Equipment Furniture and Fixtures Less: Accumulated. Depreciation Fixed Assets Total Total Assets Current Liabilities Accounts Payable Accrued Wages Income Taxes Payable Unearned Revenue Short-Term Mortgage Payable Current Liabilities Total Long-Term Liabilities Mortgage Payable Long-Term Liabilities Total Owner Equity Investment Capital Accumulated Retained Earnings Total Total Liabilities and Stockholder Equity FY- 2020 200 600 200 100 1,100 500 15 75 440 200 50 10 20 40 320 400 400 200 620 FY- 820 2021 1,540 1,683 200 700 250 100 1,250 480 13 60 433 290 45 8 30 40 413 360 360 200 710 910 1,540 1,683 Your client is considering investing in ShoeMass Enterprises. The company has only been around for a few years, but is actively looking to expand operations-thus the need for a new round of investments. After reviewing the financial documentation, you'll need to decide on your final advice for your client. By answering the following questions, you'll be able to arrive at your recommendation. 1. Your client has gotten burned on some start-ups before they couldn't keep the lights on. He's also very concerned about the fickle nature of consumer taste in retail. Are you confident in the short-term outlook for ShoeMass? The typical industry standard for liquidity is 2:1. a. Explain your rationale with proper documentation. 2. Beyond the short-term liquidity outlook, your client likes to see frugal companies who save their money prudently and grow operations through internal sources rather than debt markets. Is ShoeMass a good fit here? a. Think about the financing 3. options for companies-which way has ShoeMass leaned in the past to grow? Over the course of FY 2021, ShoeMass earned $90,000 in net income on $300,000 of revenue. Your client really values efficiency and profitability-they want to put their investment dollars to the most productive use, and they think healthy margins are the key to sustained success. Understanding that typical retail margins are 15% and that he has a separate investment opportunity with a company that is showing returns on equity of 8% annually, does ShoeMass check this box off? 4. What's your final recommendation? ShoeMass Balance Sheet (In thousands of 2021 $) Current Assets Cash Inventory Accounts Receivable Pre-paid expenses Current Assets Total Fixed Assets Property and Equipment Furniture and Fixtures Less: Accumulated. Depreciation Fixed Assets Total Total Assets Current Liabilities Accounts Payable Accrued Wages Income Taxes Payable Unearned Revenue Short-Term Mortgage Payable Current Liabilities Total Long-Term Liabilities Mortgage Payable Long-Term Liabilities Total Owner Equity Investment Capital Accumulated Retained Earnings Total Total Liabilities and Stockholder Equity FY- 2020 200 600 200 100 1,100 500 15 75 440 200 50 10 20 40 320 400 400 200 620 FY- 820 2021 1,540 1,683 200 700 250 100 1,250 480 13 60 433 290 45 8 30 40 413 360 360 200 710 910 1,540 1,683