Use Traditional FormatActual 2016
Sales
Less: Cost of Goods Sold
Gross Margin
Less: SG& Expenses
Net Income
Forecast 2017
YOY Variance
Use same format as provided in Master Budget Project
or as provided in Paley Products
Assets:
Liabilities:
Stockholders’ Equity:
Actual 2016
Forecast 2017
YOY Variance
Use Simplified Format
Actual 2016
Net Income
Add: Sources of Funds (list individually)
Total Sources of Funds
Less: Uses of Funds (list individually)
Total Uses of Funds
Net Increase in Cash
Plus: Beginning Cash Balance
Ending Cash Balance
Forecast 2017
YOY Variance
Paley Prod
Ratio Ana
Ratio
Current Ratio = Current Assets/Current Liabilities
Quick Ratio =
Inventory Turnover =
DSO =
DPO =
Gross Profit Margin =
Net Profit Margin =
Return on Assets =
Return on Equity =
Debt Ratio =
Debt/Equity Ratio =
Industry
Average
1.0
Paley Products
2016
0.6
Paley Products
Ratio Analysis
Paley Products
2015 2014
1.0
2.1
y Products
o Analysis
Analysis Comments
Paley has experienced a significant decline in their current ratio YOY. Currently,
they do not have enough current assets to cover their current liabilities. In
comparison to their industry, they are lagging and this raises concerns about
their liquidity.
Questions
Will the company be able to pay off their debt?
Is the company facing any problems or issues?
How does the company compare to their peers in their industry?
Do you see any trends or areas of concern from your analysis of the company’s financials?
Comments/Analysis
The company’s current financials do raise concerns about their ability to repay their debt.
However, based on the forecast for 2017; if they are able to implement the planned changes; it
will significantly improve their cashflow and allow the company the ability to pay off their debt.
This will slowly show improvements in Paley’s ratios as well over time and the company will be
able to continue moving forward. This will not be an easy endeavor; however, the management
team seems committed to making the improvements to turn the company back around.
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