Question

The W & H Manufacturing company was very satisfied wit their xxx1 performance. The company had only begun operations the prior year, and as a result, sales had been slow. However, things had picked up considerably in xxxi with sales more than doubling in volume. W & H had chaged none of its business practices during the year and had managed to hold its costs of goods sold to 83% of sales. All sales were made on credit, and payment was required within 30 days of the sale. The company paid for its purchases in 30 days and maitained a cash balance of 15% in sales. The only thing that had canged during the year was the company's inventory turnover, which had jumped from 3 to 6. While W&H's maagement was enthusiastic about the company's increased level of sales, it was concerned about the possible necessity of increasing its short-term debt. In ordr to assess the situation, the company was in the process of completing the financial statements shown below. (INV.Turn=C.G.S/INV) ALso use 360 day/year for ratio computation. Complete the forms given. For xxx1, use other short-term liabilities as the balancing account (a"plug")

Income statement              xxx0                  xxx1

Sales                       1250000                  2550000

Cost of goods sold    975000                 

Gross Margin           275000        

Other expenses         200000                 200000

Profit before tax          75000

Taxes @ 40%             30000

Profi after tax              45000

Balance Sheet:

Cash                      250000

Acc. Receivable     102740

Inventory               325000

Total current assets 677740

Net PPE                  400000                      380000

Total Assets        1077740

Accounts Payable   80135

Short-term notes   152605

payable

Total Current liabilities 232740

Long-term debt       300000                       300000

Common Stock       500000                       500000

Retained Earnings   45000

Total long term debt   845000

and equity

Tota liabilities and equity 1077740

1a) Compare the ROE, ROA, EM, PM, A/R Turnver, inventory turnover, fixed asset turnover for the years xxx1

1b) build the common size income statment for year xxx1

1c) Using the figures obtained in question a and b, what is your assessment of W&H manufacturing company. Will the compnay need to raise External Funds (EFN or AFN) in xxx1, and how much?

Answer 1