Look at the Financial Statements of Your Chosen Company and Calculate Some Basic Financial Ratios to Analyze the Company’s Health and Performance

In this assignment, look at the financial statements of your chosen company and calculate some basic financial ratios to analyze the company’s health and performance.

• Fill in the table below with information from the financial statements provided in your chosen company’s case study. Calculate the % change between the current year and previous year for each item. Remember to correctly identify the currency for your case study.

Most Current Year % Chg (+/–) Previous Year

Current Assets $60,000 CAD +120.69% $27,188 CAD

Total Assets $83,500 CAD +65.37% $50,492 CAD

Current Liabilities $41,262 CAD -41.76% $70,854 CAD

Total Debt $83,500 CAD 65.37% $50,492 CAD

Sales/Revenue $53,000 CAD 266.02% $14,480 CAD

Cost of Goods Sold -$29,500 CAD -447.96% $8,478 CAD

Inventory $40,000 CAD 144.78% $16,341 CAD

Net Income/Loss $62,600 CAD 472.13% -$16,822 CAD

• From the information in the table above, identify which line items are increasing with a plus sign and which are decreasing with a minus sign. Evaluate whether the change from the previous year is good or bad for the company’s performance and explain why.

Current Assets and total assets are increasing. More assets are always better. In this case, current liabilities are also decreasing, meaning that more of the corporate assets are wholly owned by Deep Roots Distillery. Total debt is increasing, though this is primarily due to the increase in surplus. This could be a good thing (more product to create from raw goods in the coming year), or a bad thing (too much surplus and some could spoil prior to production). Sales are also increasing, which is always a good thing. Net income is projected to increase, however, given that no salaries are being paid out for work, the increase appears to be deceiving. Inventory and cost of goods cost movement is weird. Inventory increased (potentially leading to spoilage), while COGS decreased (due to the overage in inventory)

• Use the information in the table above to calculate the following financial ratios. Explain what the result of each ratio says about your chosen company’s financial health.

○ Current Ratio

Current ratio is current assets divided by current liabilities

For 2014 the current ratio is: .38

For 2015 the current ratio is: 1.45

The current ratio is moving in the right direction. The 2014 ratio was extremely low, however, moving up