Using the 2007 & 2008 Income Statement and Balance Sheet provided, calculate the following
Liquidity ratios
Current ratio
Acid-test, or quick, ratio
Receivables turnover
Inventory turnover
Profitability ratios
Asset turnover
Profit margin
Return on assets
Return on common stockholders equity
Solvency ratios
Debt to total assets
Times interest earned
Please be sure to also do the following
1. Show your calculations for each ratio
2. Create a horizontal and vertical analysis for the balance sheet and the income statement
3. Write a 350- to 700-word memo to the CEO of your selected organization (Berry s Bug Busters) in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:
a) What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?
b) Which users may be interested in each type of ratio?
c) What does the collected data reveal about the performance and position of the company
Income Statement 2008 & 2007 1/1/2008-12/31/2008 Revenue $3,249,580.53 Direct Expenses Salaries & Wages $487,437.08 Vehicle Maintenance $64,991.61 Fuel $20,449.80 Traps & Chemicals $1,378,203.63 $1,951,082.12 Indirect Expenses Rent $39,338.17 Licenses $2,480.00 Insurance $103,613.43 Administrative Salaries $150,250.00 Commissions $16,991.61 Payroll Taxes $72,014.66 Legal Expenses $12,000.00 Accounting Fees $7,000.00 Office Supplies $7,800.00 Utilities $10,806.40 Advertising Expenses $116,000.00 Bad Debts $122,138.64 Depreciation Expense $94,925.75 Misc. Expense $50,000.00 $805,358.66 Total Expenses $2,756,440.78 Net Income $493,139.75 1/1/2007-12/31/2007 Revenue $3,893,027.78 Direct Expenses Salaries& Wages $583,954.17 Traps & Chemicals $1,651,100.81 Fuel $19,177.32 Vehicle Maintenance $77,860.56 $2,332,092.85 Indirect Expenses Rent $38,192.40 Licenses $2,480.00 Interest Expense $0.00 Insurance $103,613.43 Admin. Salaries $133,500.00 Commissions $52,860.49 Payroll Taxes $84,734.61 Legal Expenses $12,000.00 Accounting Fees $7,000.00 Office Supplies $7,800.00 Utilities $9,824.00 Advertising Expenses $81,510.00 Bad Debts $103,493.45 Depreciation Expense $94,925.75 Misc. Expenses $60,000.00 $791,934.13 $3,124,026.98 Net Income $769,000.80 Balance Sheet 2008 & 2007 12/31/2008 Current Assets Cash $818,440.68 Accounts Receivable $812,395.13 Inventory $205,934.30 Total Current Assets $1,836,770.12 Fixed Assets Vehicles $268,750.00 Tools $110,953.00 Less Accumulated Depreciation ($284,431.95) Total Fixed Assets $95,271.05 Total Assets $1,932,041.17 Liabilities Current Liabilities Accrued Payroll Taxes $36,007.33 Accounts Payable $270,798.38 Total Current Liabilities…
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