Question

Write a narrative of up to 750 words in which you describe the following trends in the below images related to the income statement, balance sheet and financial ratios. Identify what you believe to be the most significant changes. The assignment is completed by simply describing the changes. As an option, you may speculate as to the causes of the changes.

wwc Balance Sheet wwc Retained Earnings Horizontal Analysis Increase or (Decrease) 2018 over 2017 Dollars Percent Vertical Analysis Percent of Total Assets 2018 2017 USD 2017 400,000.00 300,000.00 80,000.00 780,000.00 Horizontal Analysis Increase or (Decrease) 2018 over 2017 Dollars Percent 98,000.00 28.65% 22,000.00 15.94% 120,000.00 25.00% 10,000.00 25.00% 110,000.00 25.00% 120,000.00 (25,000.00) 20,000.00 115,000.00 30.00% -8.33% 25.00% 14.74% 26.13% 13.82% 5.03% 44.97% USD 2018 Beginning retained earnings, January 1 440,000.00 Plus: Net Income 160,000.00 600,000.00 Less: Dividends 50,000.00 Ending retained earnings, December 31 550,000.00 21.56% 16.17% 4.31% 42.05% USD 2017 342,000.00 138,000.00 480,000.00 40,000.00 440,000.00 USD Assets 2018 Current Assets Cash 520,000.00 Accounts Receivable 275,000.00 Inventories 100,000.00 Total Current Assets 895,000.00 Property Plant & Equipment Land 300,000.00 Building 400,000.00 Equipment 760,000.00 1,460,000.00 Less: Accumulated Depreciation 365,000.00 Total Property Plant & Equipmen 1,095,000.00 Total Assets 1,990,000.00 300,000.00 400,000.00 700,000.00 1,400,000.00 325,000.00 1,075,000.00 1,855,000.00 60,000.00 60,000.00 40,000.00 20,000.00 135,000.00 0.00% 0.00% 8.57% 4.29% 12.31% 1.86% 7.28% 15.08% 20.10% 38.19% 73.37% 18.34% 55.03% 100.00% 16.17% 21.56% 37.74% 75.47% 17.52% 57.95% 100.00% 160,000.00 30,000.00 190,000.00 180,000.00 25,000.00 205,000.00 (20,000.00) 5,000.00 (15,000.00) 11.11% 20.00% -7.32% 8.04% 1.51% 9.55% 9.70% 1.35% 11.05% Liabilities Current Liabilities Accounts Payable Interest Payable Total Current Liabilities Long Term Liabilities Long Term note payable Total Liabilities Stockholder's Equity Common Stock ($1.00 par) Paid up capital in excess of par Retained Earnings Total Stockholder's Equity Total Liabilities and Equity 600,000.00 790,000.00 560,000.00 765,000.00 40,000.00 25,000.00 7.14% 3.27% 30.15% 39.70% 30.19% 41.24% 50,000.00 600,000.00 550,000.00 1,200,000.00 1,990,000.00 50,000.00 600,000.00 440,000.00 1,090,000.00 1,855,000.00 110,000.00 110,000.00 135,000.00 0.00% 0.00% 25.00% 10.09% 7.28% 2.51% 30.15% 27.64% 60.30% 100.00% 2.70% 32.35% 23.72% 58.76% 100.00%

Answer 1

Company Ratio analysis + Balance Sheet + PNL – Margin + EBITDA analysis

On overall analysis , we noticed that company is doing above Good . Company is keep on generating Gross Margin 43%+ , which is really good indication along with moderate growth in revenue .

Company registered improvement in Operating Income . Operating Income ratio also improved by few basis points

Net Income margin alos increased in current year . Company almost registered 10%+ Net Profit margin . This shows that company is managing Operting Expenses in a effective manner. At present company revenue growth 5.87% can easily cover up Total operating expenses growth of 4.17% and finally provide +ve Net profit Margin

Company recently borrow long term loan which is almost backed by Capex addition in current year . Due to this additional borrowing , Interest cost has increased .

But as per Companies present EBITDA , which is quite higher as compared with last year ( EBITDA $ 240k(2018) vs $ 210k (2017) , which is easily absorb additional Interest cost . So this represents that company is well managed with Interest bearing ratio

Also company significantly reduced Debtor collection days as compared with last year ( approx 62 days ( 2018) vs 75 days ( 2017) . This movement definitely boost up companies working capital movement .

Company at present little back by Inventory movement . Inventory days in current year increased but expect that company will reduced this Inventory days in near future and boost up revenue growth .

Overall basis comPany improved EPS in the current year 3.20 vs 2.76 of last year . This is really a excellent improvement .

On overall analysis , Noticed that Company is doing good in terms of revenue growth , generated god amount og Gross profit margin , maintain working capital management positive way along with significant reduction in Account receivable , well maintain Return on Asset , generate +ve EBITDA and EBTDA is fair enough to cover additional Interest cost . Overall Equity , retained earning position is quite string . Comoan having good amount of Equity which will cover up total debt of the company .