Activity on Financial Statement AnalysisYou are the Financial Manager of Watson Leisure Time Sporting Goods and you have approached Ms.Beatriz Tan, the Manager of SMC Bank to make an investment in your company. Watson Leisure TimeSporting Goods is a company that manufactures golf clubs, baseball bats, basketball goals, and othersimilar items. In your initial meeting with Ms. Tan, you have pointed out the steady increase in sales andnet income. Ms. Tan asked you to make a thorough analysis on the on all areas of the current and futurefinancial health as a basis later of her decision.There was a steady real growth of 2 to 3 percent in gross domestic product during the period understudy. The rate of inflation was in the 3 to 4 percent range.The firm does not currently pay a cash dividend, and return to the investor must come from selling thestock in the future.Net income before taxesTaxesNet incomeSales (all on credit)Cost of goods soldGross profitSelling and administrative expense*Operating profitInterest expenseCashMarketable securitiesAccounts receivableInventorySharesEarnings per share*Includes $ 20,000 in lease payments for each yearTotal current assetsNet plant equipmentTotal assetsExhibit 1.WATSON LEISURE TIME SPORTING GOODSAccounts payableNotes payable (bank)Income StatementTotal current liabilitiesLong-term liabilitiesTotal liabilitiesCommon stock ($10 par)Capital paid in excess of parRetained earningsExhibit 2WATSON LEISURE TIME SPORTING GOODSBalance SheetLiabilities and Stockholder's EquityAssetsTotal stockholders' equityTotal liabilities and stockholders' equity2021$1,500,000 $1,800,000 $2,160,000950,0001,120,0001,300,000680,000860,000490,000590,000190,000270,00040,000150,00048,720$ 101,2802019550,000380,000170,00030,000140,00046,120$ 93,88040,000$2.352019$ 20,00030,000150,000250,000450,000550,000$ 1,000,000$ 100,000100,000200,000250,000450,000400,000202050,000100,000550,00040,000$2.532020$ 30,00035,000230,000285,000580,000720,00085,000185,00064,850$ 120,15046,000$ 2.612021$ 20,00050,000330,000325,000725,0001,169,000$ 1,300,000 $1,894,000$ 225,000100,000325,000331,120656,1201,050,740400,000460,00050,00080,000193,880303,260643,880843,260$ 1,000,000 $1,300,000 $1,894,000$ 200,000300,000500,000550,740 Growth in salesProfit marginReturn on assets (investment)Return on equityReceivable turnoverAverage collection periodInventory turnoverFixed asset turnoverTotal asset turnoverCurrent ratioQuick ratioDebt to total assetsTimes interest earnedFixed charge coverageGrowth in EPSExhibit 3Selected Industry Ratios2.3.20195,75%8.22%13.26%10x36 days5.71x2.75x1.43x2.10x1.05x38%5.00x3.85x20209.98%5.80%8.24%13.62%9.5x37.9 days5.62x2.66x1.42x2.08x1.02x39.5%5.20x3.95x9.7%202110.02%5.81%8.48%14.16%10.01x35.6 days5.84x2.20x1.46x2.15x1.10x40.1%5.26x3.97x9.8%Required:1. Analyzed the financial condition of the company using different techniques in FinancialStatement Analysis.What can you say about the liquidity, profitability, solvency, and growth of the company?Based on your trend analysis, what is the future of company?4. What are the strengths of the company that you could mention to encourage the manager tomake an investment in the company?5. What are the weaknesses of the company that you could strengthen? What are your proposedstrategies to address these weaknesses?

Name: Activity on Financial Statement AnalysisYou are the Financial Manager
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Description: Activity on Financial Statement AnalysisYou are the Financial Manager of Watson Leisure Time Sporting Goods and you have approached Ms.Beatriz Tan, the Manager of SMC Bank to make an investment in your company. Watson Leisure TimeSporting Goods is a

Financial statement analysis refers to the evaluation and assessment of the financial statement.…

Business

Finance

Required: 1. Analyzed the financial condition of the company using different techniques in Financial Statement Analysis. 2. What can you say about the liquidity, profitability, solvency, and growth of the company? 3. Based on your trend analysis, what is the future of company? 4. What are the strengths of the company that you could mention to encourage the manager to make an investment in the company? 5. What are the weaknesses of the company that you could strengthen? What are your proposed strategies to address these weaknesses?

Required: 1. Analyzed the financial condition of the company using different techniques in Financial Statement Analysis. 2. What can you say about the liquidity, profitability, solvency, and growth of the company? 3. Based on your trend analysis, what is the future of company? 4. What are the strengths of the company that you could mention to encourage the manager to make an investment in the company? 5. What are the weaknesses of the company that you could strengthen? What are your proposed strategies to address these weaknesses?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter1: Introduction To Managerial Accounting

Section: Chapter Questions

Problem 3TIF: Communication Todd Johnson is the Vice President of Finance for Boz Zeppelin Industries Inc. At a...

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