Question

Question #1 A. Using the below account entries, prepare a Balance Sheet (BS) for years 2015 thru 2019 (10 points): 2015 2016 2017 2018 2019 Accounts Payable $286 $372 $484 5630 $819 Accounts Receivable $305 $342 $384 S431 5483 Accrued Liabilities $126 $134 $143 $152 $162 Cash $372 $306 $251 $206 $169 Common Stock $228 $263 $303 $349 $402 Furniture and Fixtures $316 $323 $330 5337 5344 Inventories $217 $283 $368 $479 5623 Land/Buildings $2,177 $2,243 $2,311 $2,381 $2,453 Accumulated Depreciation $2,249 $2,056 52,460 $2,691 $2,943 Long-Term Debt $798 $998 $1,248 $1,560 $1,950 Machinery/Equipment $1,789 $1,879 $1,973 $2,072 $2,176 Marketable Securities $51 $55 563 $67 Notes Payable $99 $119 $143 S172 $207 Other Fixed Assets $96 $97 $98 599 $100 Preferred Stock $109 S118 ] $128 S139 S151 Retained Earnings $1,945 $1,697 $1,414 | $1,089 $710 Vehicles | $324 | $422 | $549 714 T 5929 $59 B. Once you have completed your BS in Part A above, convert your BS to a "Common Size BS" for each year (2015 thru 2019) (5 points): C. Utilizing the Common Size BS you developed in Part B, identify five (5) trends that indicate the company may be struggling (5 points):

Answer 1

	Balance Sheet and common size balance sheet for the year 2015 to 2019
		2015		2016		2017		2018		2019
	Assets	$	%	$	%	$	%	$	%	$	%
	Current Assets
	Cash	372	10%	306	8%	251	6%	206	5%	169	4%
	Marketable securities	51	1%	55	1%	59	2%	63	2%	67	2%
	Accounts Receivable	305	8%	342	9%	384	10%	431	11%	483	11%
	Inventories	217	6%	283	8%	368	10%	479	12%	623	14%
	Total Current Assets	945	26%	986	27%	1062	27%	1179	29%	1342	30%
	Non current assets
	Land/Building	2177	61%	2243	61%	2311	60%	2381	58%	2453	56%
	Machinery/Equipment	1789	50%	1879	51%	1973	51%	2072	51%	2176	49%
	Furniture & Fixtures	316	9%	323	9%	330	9%	337	8%	344	8%
	Vehicles	324	9%	422	11%	549	14%	714	17%	929	21%
	Other Fixed Assets	96	3%	97	3%	98	3%	99	2%	100	2%
	Accumulated depreciation	-2056	-57%	-2249	-61%	-2460	-64%	-2691	-66%	-2943	-67%
	Total Non Current assets	2646	74%	2715	73%	2801	73%	2912	71%	3059	70%
	Total Assets	3591	100%	3701	100%	3863	100%	4091	100%	4401	100%
	Liabilities
	Current Liabilities
	Accounts payable	286	8%	372	10%	484	13%	630	15%	819	19%
	Accrued Liabilities	126	4%	134	4%	143	4%	152	4%	162	4%
	Notes payable	99	3%	119	3%	143	4%	172	4%	207	5%
	Total Current Liabilities	511	14%	625	17%	770	20%	954	23%	1188	27%
	Non Current Liabilities
	Long term debt	798	22%	998	27%	1248	32%	1560	38%	1950	44%
	Total Liabilities	1309	36%	1623	44%	2018	52%	2514	61%	3138	71%
	Common Stock	228	6%	263	7%	303	8%	349	9%	402	9%
	Preferred Stock	109	3%	118	3%	128	3%	139	3%	151	3%
	Retained Earnings	1945	54%	1697	46%	1414	37%	1089	27%	710	16%
	Total Networth	2282	64%	2078	56%	1845	48%	1577	39%	1263	29%
	Total Liabilities & Net worth	3591	100%	3701	100%	3863	100%	4091	100%	4401	100%
	Five trends that indicate company is struggling is given below:-
	i) The balance of cash as a percentage of total assets is decreasing indicating that company is facing liquidity crunch.
	ii) The balance of long term debt is increasing indicating heavy reliance on outside funds
	iii) The balance of retained earnings is on a decline indicating poor profitability of the company
	iv) The balance of trade payables is increasing (infact it is more than trade receivables) whereas trade receivables is constant so the company is facing difficulty in paying off its payables on time
	v) The balance of inventories is increasing gradually indicating the stock turnover is very low.