Question

Take a look at this companies balance sheet. Analyze and describe the health of the company.

	2020	2021	2022
Cash	$625,025	$1,648,231	$3,697,402
Accounts Receivable	$54,538	$84,079	$138,615
Inventory
Other Current Assets		$0	$0
Total Current Assets	$679,562	$1,732,310	$3,836,016
Long-Term Assets
Accumulated Depreciation
Total Long-Term Assets
Total Assets	$679,562	$1,732,310	$3,836,016
Accounts Payable	$8,815	$8,732	$8,649
Income Taxes Payable	$24,912	$64,111	$126,782
Sales Taxes Payable	$11,537	$19,403	$31,988
Short-Term Debt	$0	$0	$0
Prepaid Revenue
Total Current Liabilities	$45,264	$92,246	$167,419
Long-Term Debt	$20,000	$0	$0
Total Liabilities	$65,264	$92,246	$167,419
Paid-In Capital	$514,650	$514,650	$514,650
Retained Earnings		$99,648	$1,125,414
Earnings	$99,648	$1,025,766	$2,028,534
Total Owner's Equity	$614,298	$1,640,064	$3,668,598
Total Liabilities & Equity	$679,562	$1,732,310	$3,836,016

Answer 1

• Their is no additional capital invested in the company for the three years.The capital have been constant over the 3years.
• In the first year their are no retained earnings.But later the retained earnings have increased,The main reason behind it might be that the company is making good profits.
• The earnings (profits)if the company have increased normally from first year to next year. But the profits have doubled in the third year comparatively. Which means that the company is making good sales.Which is very good for the company. The equity of the owners is in a good position.
• liquid cash have increased over the years.which means that the company is keeping the cash ready to meet its liquid demands.
• Account receivables have increased over the years which means their is more cash yet to come from outsiders. Which is good for the company .
• Their is no inventory,which I think is the not a good sign.rather than keeping so much liquid cash the company should purchase inventory. If same continues the company cannot meet its demands. And their will be no profits.
• Their are no long term assets of the company. Which means that company might have gone out for outsourcing.As the company have good profits the company should start its own production.Which will get even more profits for the company.
• With the increase in the profits the cuurent liabilities of the company have also increased which I think is quiet obvious.
• The long term debt which was taken in the first year was repaid in the next year itself.
• At the end it can be said that the company should maintain its own inventory.and start its own production.and maintain long term assets.The retained earnings of the company can be used for this purpose.And additional long term debt can also be taken.

I hope I have provided enough details. Please give it an up-vote. Thanks in advance.