1. Conduct a financial analysis of the firm including calculating ratios in the following areas:
   • Liquidity
   • Asset management
   • Debt Management
   • Profitability
   • Internal and Sustainable Growth
2. Write Executive Summary about the firm's performance based on your analysis.

Balance Sheet (000's omitted)	YR 7	Debits	Credits	YR 8	Debits	Credits	YR 9
Assets
Cash and cash equivalents	6,600		767	5,833	1,241		7,074
Accounts receivable	1,820	1,700		3,520	300		3,820
Allowance for Doubtful Accounts	(20)	0		(20)	0		(20)
Net Accounts Receivable	1,800			3,500			3,800
Inventory	6,880	13,500		20,380	2,507		22,887
Other Current Assets	7,000	100		7,100	1,150		8,250
Current Assets	22,280			36,813			42,011
Property, Plant, and Equipment	35,200	105,616		140,816			140,816
Less Depreciation	3,200		15,436	18,636		13,524	32,160
Property, Plant, and Equipment, net	32,000			122,180			108,656
L-T Investments	12,500		4,000	8,500	2,000		10,500
Intangible Assets	0			0			0
Other L-T Assets	12,370	5,350		17,720		2,507	15,213
Total Assets	79,150			185,213			176,380
Liab. & Equity
Accounts payable	3,250		4,091	7,341		383	7,724
LOC Payable	8,600		900	9,500	900		8,600
Other Current Liabilities	0		0	0		0	0
Accrued Liabilities	2,027		2,646	4,673		450	5,123
Current Maturities Long Term Debt	5,500		9,500	15,000		0	15,000
Total Current Liabilities	19,377			36,514			36,447
Long-Term Notes Payable - Bank	0		40,000	40,000	10,000		30,000
Long-Term Notes Payable - Former Owners Chicago	0		45,000	45,000	5,000		40,000
Total Liabilities	19,377			121,514			106,447
Shareholders' Equity
Common Stock, par value $0.01 per share, 20,000,000 authorized; 5,000,000 issued and outstanding on December 31, 2007	50			50			50
Additional Paid-In Capital	4,950			4,950			4,950
Retained Earnings	54,773		3,926	58,699		6,234	64,933
Total Shareholders' Equity	59,773	126,266	126,266	63,699	23,098	23,098	69,933
Total Liabilities and Shareholders' Equity	79,150		0	185,213		0	176,380
Income Statement	YR 7	Debits	Credits	YR 8	Debits	Credits	YR 9
Company-Operated Retail	77,652		182,360	182,360		187,000	187,000
Other Sales -Commercial/ Internet	3,828		11,640	11,640		13,000	13,000
Total Net Sales	81,480			194,000		200,000	200,000
Total Cost of Sales and related occupancy costs	32,590	83,420		83,420	88,078		88,078
Store employees PT counter staff, inventory	27,500	64,356		64,356	68,425		68,425
Store Supervisors	5,090	19,064		19,064	19,653		19,653
Gross Margin	48,890			110,580			111,922
Operating Expenses	30,148			69,840	72,000		72,000
General and Administrative Expenses	4,237			9,500			9,600
Executives Salaries/Benefits and Fringes	678	1,520		1,520	1,536		1,536
Human Resources Salaries and Benefits	362	811		811	820		820
Training	88	198		198	200		200
Advertising and Recruiting:HR	128	287		287	290		290
Finance &Accounting	287	643		643	650		650
Professional Services	79	178		178	180		180
New Product Development	66	148		148	150		150
Public Relations	45	102		102	103		103
(MIS)IT : Salaries and Benefits	1,472	3,300		3,300	3,335		3,335
IT opns cost and telecommunications	692	1,550		1,550	1,565		1,565
Travel and Entertainment	221	496		496	501		501
Occupancy	119	267		267	270		270
Marketing Expenses	815	2,250		2,316	2,250		2,316
Salaries, Benefits and Training	226			624			624
Advertising	191			527			527
Promotions	385			1,065			1,065
Web Development	13			100			100
EBITDA	13,690			28,924			28,006
Depreciation and Amortization	3,200	15,436		15,436	13,524		13,524
Earnings from Operations	10,490			13,488			14,482
Interest Income	831		649	649		860	860
Interest Expense	664	6,575		6,575	5,606		5,606
Earnings Before Income Taxes (EBIT)	10,657			7,562			9,736
Income Taxes	3,730			3,636	3,502		3,502
Net Income	6,927			3,926			6,234
Statement of Cash Flows				YR 8			YR 9
Cash Flows From Operating Activities
Net Income				3,926			6,234
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation				15,436			13,524
(Increase) decrease in Inventory				(13,500)			(2,507)
(Increase) in Accounts Receivable				(1,700)			(300)
(Increase) decrease in Other Current Assets				(100)			(1,150)
(Increase) decrease in Other Long Term Assets				(5,350)			2,507
Increase (decrease) in Accounts Payable				4,091			383
Increase (decrease) in Accrued Liabilities				2,646			450
Net Cash Provided by Operating Activities				5,449			19,141
Cash Flows from Investing activities
(Increase) decrease in Property, Plant, Equipment				(105,616)			0
(Increase) decrease in LT Investments				4,000			(2,000)
(Increase) decrease in Intangible Assets				0			0
Net cash flows from investing activities				(101,616)			(2,000)
Cash Flows from Financing activities
Increase (decrease) in LOC Payable				900			(900)
Increase (decrease) Current Maturities Long Term Debt				9,500			0
Increase (decrease)in Loan Payable Bank				40,000			(5,000)
Increase (decrease) in LT Notes Payable Former Owners				45,000			(10,000)
Net cash flows from financing activities				95,400			(15,900)
Net (decrease) increase in cash and cash equivalents				(767)			1,241
Beginning Cash				6,600			5,833
Ending Cash				5,833			7,074
				5,833			7,074

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Answer rating: 100% (QA)

Answer YouConduct a financial analysis of the firm including calculating ratios in the following areasLiquidityAsset managementDebt ManagementProfitabilityInternal and Sustainable GrowthWrite Executiv... View the full answer