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Background You are an Analyst for the professional service firm, Bust 1043 ULP Your firm specializes in providing a wide variety of internal business solutions for different clients. It is your first day on the job and a Manager in the Consulting area asks you fot some help with an investment decision for one of your large clients, Big Spenders inc. Ready to make an impression on your first day, you start reading the background information provided by the Manager. Additional Information Big Spenders inc. has been working on diversifying its portfollo of investments and requires accounting advice for a decision between two car cleaning and detailing comparies. Your responsadity is to perform a comparative analysis of the profitability of two potential equity invostments. Your engagement manager on this job has given you a brief background on the operations of the fwo companies Alto Wash Bot Ltd. (AWBL) has tecentiy completed the research and development of a new touch acreen app for all mobile devices This new technology is both more user friendly than the current technology on the market. Auto Wash Bot Ltd has just signed a major contract to provide the Auto Wash Bot terminal to a major produce of mobile devices. The founder of the business would like to tell a 60$ interest in the business for $100.000 in order to finance further expansion of operations. Popeye's Muscle Wash Ltd (PMWL) is a self-service, coin-operated car wash located in a busy residential area. The company provides all of the services of a typical car wash, Inckuding soap, wax, vacuuming as well as pressure washing. PMWL has been long establiahed and enjoys the loyalty and repeat business of many local residents. The Cutrent owner is getting up in age and would like to sell 100 s ownership interest in the business for $100,000 to pursue retirement the current year's income statement is consistent with peior years. One of the firat tasks in the analyas of the potential equity acquisition is an assensment of each company's current and future profitability. Vour manager has provided you with coples of tach company's income statement (see below). Next, you ste to calculate the mpected return on the investment for each company. You have been asked to discush any other isswes thet you believe are relevant to the imestiment deciaion. The Consulting Managet would ake you to prepare the report and have it on his desk for revew first thing tomorrow moming once reviewed, this report will be subinitted to Big Gpendert inc in order to support their decision Auto Wash Bot Ltd. RevenueCostofGoodsSoldGrossProfit$375,00086,250288,750 Other Expenses AdvertisingOfficeExpenseResearchWagesandSalaries35,40022,750195,00040,000 Total Other Expenses 293,150 Income Before Taxes (4,400) Income Tax 0 Net Income $(4,400) Popeye's Muscle Wash Ltd Income Statement For the Year Ended December 31, 2015 \begin{tabular}{lr} Revenue & $375,000 \\ \hline Cost of Goods Sold & 163,125 \\ Gross Profit & 211,875 \end{tabular} Other Expenses Advertising 5,200 OfficeExpenseRepairsandMaintenance17,40085,000 Wages and Salaries 50,000 Total Other Expenses 157,600 Income Before Taxes 54,275 Income Tax 8.413 Netinoome $45,862 Background You are an Analyst for the professional service firm, Bust 1043 ULP Your firm specializes in providing a wide variety of internal business solutions for different clients. It is your first day on the job and a Manager in the Consulting area asks you fot some help with an investment decision for one of your large clients, Big Spenders inc. Ready to make an impression on your first day, you start reading the background information provided by the Manager. Additional Information Big Spenders inc. has been working on diversifying its portfollo of investments and requires accounting advice for a decision between two car cleaning and detailing comparies. Your responsadity is to perform a comparative analysis of the profitability of two potential equity invostments. Your engagement manager on this job has given you a brief background on the operations of the fwo companies Alto Wash Bot Ltd. (AWBL) has tecentiy completed the research and development of a new touch acreen app for all mobile devices This new technology is both more user friendly than the current technology on the market. Auto Wash Bot Ltd has just signed a major contract to provide the Auto Wash Bot terminal to a major produce of mobile devices. The founder of the business would like to tell a 60$ interest in the business for $100.000 in order to finance further expansion of operations. Popeye's Muscle Wash Ltd (PMWL) is a self-service, coin-operated car wash located in a busy residential area. The company provides all of the services of a typical car wash, Inckuding soap, wax, vacuuming as well as pressure washing. PMWL has been long establiahed and enjoys the loyalty and repeat business of many local residents. The Cutrent owner is getting up in age and would like to sell 100 s ownership interest in the business for $100,000 to pursue retirement the current year's income statement is consistent with peior years. One of the firat tasks in the analyas of the potential equity acquisition is an assensment of each company's current and future profitability. Vour manager has provided you with coples of tach company's income statement (see below). Next, you ste to calculate the mpected return on the investment for each company. You have been asked to discush any other isswes thet you believe are relevant to the imestiment deciaion. The Consulting Managet would ake you to prepare the report and have it on his desk for revew first thing tomorrow moming once reviewed, this report will be subinitted to Big Gpendert inc in order to support their decision Auto Wash Bot Ltd. RevenueCostofGoodsSoldGrossProfit$375,00086,250288,750 Other Expenses AdvertisingOfficeExpenseResearchWagesandSalaries35,40022,750195,00040,000 Total Other Expenses 293,150 Income Before Taxes (4,400) Income Tax 0 Net Income $(4,400) Popeye's Muscle Wash Ltd Income Statement For the Year Ended December 31, 2015 \begin{tabular}{lr} Revenue & $375,000 \\ \hline Cost of Goods Sold & 163,125 \\ Gross Profit & 211,875 \end{tabular} Other Expenses Advertising 5,200 OfficeExpenseRepairsandMaintenance17,40085,000 Wages and Salaries 50,000 Total Other Expenses 157,600 Income Before Taxes 54,275 Income Tax 8.413 Netinoome $45,862