Amaron Products

COMMON SIZE STATEMENT CALCULATIONS AND ANALYSIS

COMMON SIZE ANALYSIS: On the COMMON SIZE worksheet in the CASE STUDY DATA SHEETS (Fall 2016).xlsx prepare the Common Size Income Statements and Balance Sheets for 2015 and 2016.

a. Complete a Line-by-Line Analysis of income statement and balance sheet items to determine if each statement item is BETTER, SAME AS, or WORSE than the Benchmark firms statement items.

2015 COMMON SIZE INCOME STATEMENT	Amaron Products	BENCHMARK FIRM	LINE BY LINE ANALYSIS OF 2015 INCOME STATEMENT COMPARED TO THE BENCHMARK FIRM (BETTER, SAME AS, WORSE than the Benchmark firm)
	2015	2015
Total sales	0.0%	100.0%
Cost of goods sold	0.0%	73.7%
Administrative expense	0.0%	9.6%
Earnings before interest, taxes, depreciation & amortization (EBITDA)	0.0%	16.7%
Depreciation	0.0%	2.3%
Earnings before interest & taxes.(EBIT)	0.0%	14.4%
Interest expense	0.0%	2.2%
Earnings Before Taxes (EBT)	0.0%	12.2%
Taxes	0.0%	4.3%
Net income	0.0%	7.9%
Dividends	0.0%	3.2%
Additions to Retained Earnings	0.0%	4.8%

2015 COMMON SIZE BALANCE SHEET	Amaron Products	BENCHMARK FIRM	LINE BY LINE ANALYSIS OF 2015 BALANCE SHEET COMPARED TO THE BENCHMARK FIRM (BETTER, SAME AS, WORSE than the Benchmark firm)
	2015	2015
ASSETS
Cash	0.0%	6.8%
Accounts receivable	0.0%	17.2%
Inventory	0.0%	31.0%
Total Current Assets	0.0%	55.0%
Net fixed assets	0.0%	45.0%
TOTAL ASSETS	0.0%	100.0%
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable	0.0%	10.7%
Accruals	0.0%	4.2%
Notes payable	0.0%	12.6%
Total Current Liabilities	0.0%	27.5%
Long-term debt	0.0%	14.5%
TOTAL LIABILITIES	0.0%	42.0%
Common stock	0.0%	5.2%
Retained earnings*	0.0%	52.8%
TOTAL STOCKHOLDERS' EQUITY	0.0%	58.0%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	0.0%	100.0%

2016 COMMON SIZE INCOME STATEMENT	Amaron Products	BENCHMARK FIRM	LINE BY LINE ANALYSIS OF 2016 INCOME STATEMENT COMPARED TO THE BENCHMARK FIRM (BETTER, SAME AS, WORSE than the Benchmark firm)
	2016	2016
Total sales	0.0%	100.0%
Cost of goods sold	0.0%	73.0%
Administrative expense	0.0%	9.4%
Earnings before interest, taxes, depreciation & amortization (EBITDA)	0.0%	17.5%
Depreciation	0.0%	2.5%
Earnings before interest & taxes.(EBIT)	0.0%	15.0%
Interest expense	0.0%	2.1%
Earnings Before Taxes (EBT)	0.0%	12.9%
Taxes	0.0%	4.5%
Net income	0.0%	8.4%
Dividends	0.0%	3.4%
Additions to Retained Earnings	0.0%	5.0%

2016 COMMON SIZE BALANCE SHEET	Amaron Products	BENCHMARK FIRM	LINE BY LINE ANALYSIS OF 2016 BALANCE SHEET COMPARED TO THE BENCHMARK FIRM (BETTER, SAME AS, WORSE than the Benchmark firm)
	2016	2016
ASSETS
Cash	0.0%	7.1%
Accounts receivable	0.0%	17.4%
Inventory	0.0%	31.1%
Total Current Assets	0.0%	55.5%
Net fixed assets	0.0%	50.4%
TOTAL ASSETS	0.0%	100.0%
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable	0.0%	11.0%
Accruals	0.0%	4.4%
Notes payable	0.0%	13.2%
Total Current Liabilities	0.0%	28.5%
Long-term debt	0.0%	13.4%
TOTAL LIABILITIES	0.0%	41.9%
Common stock	0.0%	4.7%
Retained earnings*	0.0%	53.4%
TOTAL STOCKHOLDERS' EQUITY	0.0%	58.1%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	0.0%	100.0%

Amaron Products
INCOME STATEMENT
	2015	2016
Total sales	$50,037,400	$55,351,400
Cost of goods sold	38,028,500	42,200,400
Administrative expense	5,103,800	5,573,300
Earnings before interest, taxes, depreciation & amortization (EBITDA)	6,905,100	7,577,700
Depreciation	1,124,700	1,574,100
Earnings before interest & taxes.(EBIT)	5,780,400	6,003,600
Interest expense	981,500	1,223,200
Earnings Before Taxes (EBT)	4,798,900	4,780,400
Taxes	1,679,600	1,529,800
Net income	3,119,300	3,250,600
Dividends	623,900	650,100
Additions to Retained Earnings	2,495,400	2,600,500
Amaron Products
BALANCE SHEET
	2015	2016
ASSETS
Cash	$650,500	$716,900
Accounts receivable	8,339,600	10,015,900
Inventory	12,676,200	18,456,500
Total Current Assets	21,666,300	29,189,300
Net Fixed Assets	23,827,400	25,805,100
TOTAL ASSETS	$45,493,700	$54,994,400
LIABILITIES & STOCKHOLDER'S EQUITY
Accounts payable	$3,138,000	$4,233,200
Accruals	1,701,100	1,833,800
Notes payable	5,687,100	8,687,100
Total current liabilities	10,526,200	14,754,100
Long-term debt	9,065,300	12,065,300
TOTAL LIABILITIES	19,591,500	26,819,400
Common stock	2,500,000	2,500,000
Retained earnings*	23,402,200	25,675,000
TOTAL STOCKHOLDERS' EQUITY	25,902,200	28,175,000
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY	$45,493,700	$54,994,400
Amaron Products
ADDITIONAL INFORMATION
Information	2015	2016
Growth rate in sales	12.80%	10.62%
Depreciation as a % of net fixed assets	5.39%	6.61%
Short-term interest expense	5.53%	5.75%
Long-term interest expense	6.75%	7.02%
Income tax rate	35.00%	32.00%
Dividend payout ratio	20.00%	20.00%
Fixed assets as a percent of total capacity.	92.00%	85.00%
End of year stock price	$27.67	$26.54
Number of common shares outstanding	2,500,000	2,500,000