1. Look at Vermont Heritage’s sales revenue, EBIT, and net income over the three-year period. Would you classify it as a growing, diminishing, or a stable company?
2. Look at Vermont Heritage’s expense accounts, cost of goods sold, and selling and administrative expenses. Do they seem to be roughly proportional to sales? Do any of these categories seem to be growing out of control?
3. Depreciation expense is the same for all three years. What does that tell you about Vermont Heritage’s growth?
4. Look at Vermont Heritage’s EBIT, interest expense, and debt accounts (current liabilities, long-term debt, and other liabilities) over the three-year period. Comparing debt to equity, do you think the company seems to have excessive debt? Would you expect the company to have any problems meeting its interest payments?
5. Dividends have increased as a percentage of net income. Why do you think the company decided to pay out more of its earnings to shareholders?
6. Compare current assets with current liabilities. Would you expect Vermont Heritage to have any problems meeting its short-term obligations?
7. Overall, do you think Vermont Heritage will be a relatively safe tenant for Hudson Valley’s building?