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1 Jan Purchased an existing factory building with the surrounding land for $24,700,000 cash

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1 Jan Purchased an existing factory building with the surrounding land for $24,700,000 cash. Stamp duty was at 10% of the purchase price, estate agent commission was 1% of the purchase price, and $30,000 had to be spent to remove the debris and abandoned structures found on the estate. The company borrowed a 7%, 5-year, $10,000,000 note, to finance this acquisition and paid the remaining costs in cash. An appraisal of the land and building at the time of purchase indicated that the market value of the land was $20,000,000 and the market value of the building was $10,000,000. Land has an indefinite useful life whereas the building is expected to have a useful life of 20 years. Residual value for building is estimated to be $1,000,000. The building is to be depreciated using the straight method.

Statement of Financial Position Balance Sheets 2009 2010 2011E $ 9,000 48,600 351,200 715,200 $1,124,000 491,000 146,200 $ 344.800 $1.468 800 $ 7,282 20,000 632,160 1.287360 $ 1,946,802 1,202,950 263,160 $939.790 $2.886,592 $ 14,000 71,632 878,000 1.716,480 $2,680,112 1,220,000 383.160 $ 836,8-40 $3,516,952 Assets Cash Short-term investments Accounts receivable Inventories Total current assets Gross fixed assets Less Accumulated depreciation Net fixed assets Total assets Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt Common stock (100,000 shares) Retained earnings Total equity Total liabilities and equity S 145,600 200,000 136,000 $ 481,600 323,432 460,000 203.768 $ 663,768 $1,468 800 S 324,000 720,000 284,960 $1,328,960 1,000,000 460,000 97632 $ 557,632 $2.886,592 $ 359,800 300,000 380,000 $1,039,800 500,000 1.680.936 296,216 $1.977,132 $3,516,952 Sales Cost of goods sold Other expenses Depreciation Total operating costs EBIT Interest expense EBT Taxes (40%) Net income 2009 $3,432,000 2,864,000 340,000 18,900 $3.222.900 $ 209,100 62.500 $ 146,600 58,640 $ 87,960 2010 $5,834,400 4.980,000 720,000 116,960 $5,816,960 $ 17,440 176,000 158,560) (63,424) S 95,136 2011E $7,035,600 5,800,000 612,960 120,000 S6,532,960 $ 502,640 80,000 S422,640 169,056 253,584 Other Data Stock price $ 8.50 s 6.00 Shares outstanding 100,000 100,000 EPS $ 0.880 $0.951) DPS $ 0.220 0.110 Tax rate 40% 40% Book value per share $ 6,638 $ 5.576 Lease payments $ 40,000 $ 40,000 Note: "E" denotes estimated the 2011 data are forecasts. $ 12.17 250,000 S 1.014 0.220 40% $ 7.909 $ 40,000 Fafa must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions should be taken. Your assignment is to help her answer the following questions. Provide clear explanations, not yes or no answers. a. Perform a common size analysis and percentage change analysis for 2010, using 2009 as the base year. What do these analyses tell you about the company? b. Perform a vertical analysis for 2010 c. Write short notes on the main classification of financial ratios. d. Calculate the following ratios and explain your answer: i. Inventory Turnover ii. Working capital tumover iii. Receivables tumover iv. Current ratio V. Quick ratio vi. Cash ratio vii. Interest Coverage ratio viii. Financial leverage ix. Pretax profit margin X. Net profit margin xi. Return on equity xii. Return on assets xiii.