The Alma Company and the Otis Corporation each reported the following: Alma Year 3 Year 2...

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The Alma Company and the Otis Corporation each reported the following: Alma Year 3 Year 2 Year 1 Year 3 Otis Year 2 Year 1 Income Statement Revenue 11,660 10,740 9,780 14,200 15,600 16,200 Cost of goods sold 8,840 8,100 6,940 10,850 11,750 12,300 Selling & admin. expenses 2,570 2,540 2,600 2,400 2,600 2,550 Tax expense 15 10 20 70 60 75 Interest expense 75 30 15 220 450 400 Net Income 160 60 205 660 740 875 Balance Sheet Assets Cash 980 965 970 3,730 3,345 2,815 Accounts receivable 305 230 350 500 375 450 Inventory 1,690 1,480 1,210 2,890 3,155 2,400 Property & equipment (net) 1,300 1,150 915 4,280 3,720 3,620 Total Assets 4,275 3,825 3,445 11,400 10,595 9,285 Liabilities Accounts payable 1,590 1,275 1,280 2,690 3,235 2,925 Long term liabilities 520 445 265 3,220 2,610 2,485 Stockholders' Equity Common stock 815 815 815 1,290 1,290 1,290 Retained earnings 1,350 1,290 1,085 4,200 3,460 2,585 Total Liab. & Equity 4,275 3,825 3,445 11,400 10,595 9,285 Required: A. Prepare a horizontal analysis on revenue, cost of goods sold and net income and assess the results. B. Calculate all of the ratios presented in class for each company and assess the relative results. Round and state each ratio as presented in class. C. Based on your results in requirement B, which company would you rather sell inventory to (if sold on account), make a long-term loan to and/or invest in? Briefly explain why for each. D. If Alma borrowed $1,500 on a long-term loan in year 3, how would that transaction impact each ratio calculated in requirement b? 2 The Alma Company and the Otis Corporation each reported the following: Alma Year 3 Year 2 Year 1 Year 3 Otis Year 2 Year 1 Income Statement Revenue 11,660 10,740 9,780 14,200 15,600 16,200 Cost of goods sold 8,840 8,100 6,940 10,850 11,750 12,300 Selling & admin. expenses 2,570 2,540 2,600 2,400 2,600 2,550 Tax expense 15 10 20 70 60 75 Interest expense 75 30 15 220 450 400 Net Income 160 60 205 660 740 875 Balance Sheet Assets Cash 980 965 970 3,730 3,345 2,815 Accounts receivable 305 230 350 500 375 450 Inventory 1,690 1,480 1,210 2,890 3,155 2,400 Property & equipment (net) 1,300 1,150 915 4,280 3,720 3,620 Total Assets 4,275 3,825 3,445 11,400 10,595 9,285 Liabilities Accounts payable 1,590 1,275 1,280 2,690 3,235 2,925 Long term liabilities 520 445 265 3,220 2,610 2,485 Stockholders' Equity Common stock 815 815 815 1,290 1,290 1,290 Retained earnings 1,350 1,290 1,085 4,200 3,460 2,585 Total Liab. & Equity 4,275 3,825 3,445 11,400 10,595 9,285 Required: A. Prepare a horizontal analysis on revenue, cost of goods sold and net income and assess the results. B. Calculate all of the ratios presented in class for each company and assess the relative results. Round and state each ratio as presented in class. C. Based on your results in requirement B, which company would you rather sell inventory to (if sold on account), make a long-term loan to and/or invest in? Briefly explain why for each. D. If Alma borrowed $1,500 on a long-term loan in year 3, how would that transaction impact each ratio calculated in requirement b? 2

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a i To plot the shape of the set of feasible meanvariance combinations of returns we can use the efficient frontier The efficient frontier represents ... View the full answer