Adeel Ullah Sheikh

Section A
Professor Office's Beach Cabana Balance Sheets
As of December 31, 2014 and 2013

Assets 2014 2013

Cash $ 33,000 $ 28,000

Marketable securities 20,000 22,000

Notes Receivable 5,000 3,000

Accounts Receivable 50,000 56,000

Merchandise Inventory 70,000 43,000

Prepaid expenses 6,000 4,000

Total current assets 184,000 156,000

Property, plant, and equipment 340,000 310,000

Total assets $ 524,000 $ 466,000

Liabilities

Accounts payable $ 41,000 $ 38,000

Salaries payable 2,000 3,500

Taxes payable 4,000 2,000

Total current liabilities 47,000 43,500

Bonds payable, 5% 100,000 100,000

Total liabilities 147,000 143,500

Stockholder's equity:

Preferred stock 6%, 40,000 40,000

Common stock 175,000 145,500

Retained earnings 162,000 137,000

Total stockholder's equity 377,000 322,500

Total liabilities and stockholders equity $ 524,000 $ 466,000

Professor Office's Beach Cabana Annual INCOME STATEMENTSFor years Ended 2014
and 2013

2014 2013
Revenue
Amount Amount

Sales $ 225,000 $ 195,000

Less: Sales returns and allowances $ (3,840) $ (2,750)

Net Sales $ 221,160 $ 192,250

Cost of goods sold

Merchandise inventory, January 1 $ 66,000 $ 72,000

Purchases less returns and allowances 98,000 80,000

Total Cost of merchandise available for sale $ 164,000 $ 152,000

Less: Merchandise inventory, March 31 $ (60,225) $ (61,000)

Cost of goods sold $ 103,775 $ 91,000

Gross Profit $ 117,385 $ 101,250

Operating expenses

Delivery expenses $ 467 $ 200

Depreciation expense-equipment 3,600 3,600

Payroll taxes expense 388 295

Salary expense 10,739 10,500

Supplies expense 204 300

Telephone expense 175 210

Utilities expense 1,907 1,500

Total operating expenses $ 17,480 $ 16,605

Net Income before federal income tax $ 99,905 $ 84,645

Federal income tax $ (12,123) $ (11,800)

Net income after federal income tax $ 87,782 $ 72,845

Horizontial Analysis
Professor Office's Beach Cabana Balance Sheets
As of December 31, 2014 and 2013

Particular $ Dollar Change % Percent Change

Assets 2014 2013

Cash 33000 - 28000 = 5000 5000 / 28000 * 100 = 17.8571428571429%

Marketable securities 20000 - 22000 = -2000 -2000 / 22000 * 100 = -9.09090909090909%
Notes Receivable 5000 - 3000 = 2000 2000 / 3000 * 100 = 66.6666666666667%
Accounts Receivable 50000 - 56000 = -6000 -6000 / 56000 * 100 = -10.7142857142857%
Merchandise Inventory 70000 - 43000 = 27000 27000 / 43000 * 100 = 62.7906976744186%

Prepaid expenses 6000 - 4000 = 2000 2000 / 4000 * 100 = 50%

Total current assets 184000 - 156000 = 28000 28000 / 156000 * 100 = 17.9487179487179%

Property, plant, and equipment 340000 - 310000 = 30000 30000 / 310000 * 100 = 9.67741935483871%

Total assets 524000 - 466000 = 58000 58000 / 466000 * 100 = 12.4463519313305%

Liabilities
Accounts payable 41000 - 38000 = 3000 3000 / 38000 * 100 = 7.89473684210526%
Salaries payable 2000 - 3500 = -1500 -1500 / 3500 * 100 = -42.8571428571429%

Taxes payable 4000 - 2000 = 2000 2000 / 2000 * 100 = 100%

Total current liabilities 47000 - 43500 = 3500 3500 / 43500 * 100 = 8.04597701149425%

Bonds payable, 5% 100000 - 100000 = 0 0 / 100000 * 100 = 0%

Total liabilities 147000 - 143500 = 3500 3500 / 143500 * 100 = 2.4390243902439%

Stockholder's equity:
Preferred stock 6%, 40000 - 40000 = 0 0 / 40000 * 100 = 0%
Common stock 175000 - 145500 = 29500 29500 / 145500 * 100 = 20.2749140893471%

Retained earnings 162000 - 137000 = 25000 25000 / 137000 * 100 = 18.2481751824818%

Total stockholder's equity 377000 - 322500 = 54500 54500 / 322500 * 100 = 16.8992248062016%

Total liabilities and stockholders equity 524000 - 466000 = 58000 58000 / 466000 * 100 = 12.4463519313305%
Professor Office's Beach Cabana Annual INCOME STATEMENTS
For years Ended 2014 and 2013
Particular $ Dollar Change % Percent Change
2014 2013
Revenue
Amount Amount
Sales 225000 - 195000 = 30000 30000 / 195000 * 100 = 15.3846153846154%
Less: Sales returns and allowances -3840 - (-2750) = -1090 -1090 / -2750 * 100 = 39.6363636363636%
Net Sales 221160 - 192250 = 28910 28910 / 192250 * 100 = 15.037711313394%

Cost of goods sold

Merchandise inventory, January 1 66000 - 72000 = -6000 -6000 / 72000 * 100 = -8.33333333333333%

Purchases less returns and allowances 98000 - 80000 = 18000 18000 / 80000 * 100 = 22.5%

Total Cost of merchandise available for

164000 - 152000 = 12000 12000 / 152000 * 100 = 7.89473684210526%
sale

Less: Merchandise inventory, March 31 -60225 - (-61000) = 775 775 / -61000 * 100 = -1.27049180327869%

Cost of goods sold 103775 - 91000 = 12775 12775 / 91000 * 100 = 14.0384615384615%
Gross Profit 117385 - 101250 = 16135 16135 / 101250 * 100 = 15.9358024691358%

Operating expenses

Delivery expenses 467 - 200 = 267 267 / 200 * 100 = 133.5%

Depreciation expense-equipment 3600 - 3600 = 0 0 / 3600 * 100 = 0%

Payroll taxes expense 388 - 295 = 93 93 / 295 * 100 = 31.5254237288136%
Salary expense 10739 - 10500 = 239 239 / 10500 * 100 = 2.27619047619048%
Supplies expense 204 - 300 = -96 -96 / 300 * 100 = -32%
Telephone expense 175 - 210 = -35 -35 / 210 * 100 = -16.6666666666667%
Utilities expense 1907 - 1500 = 407 407 / 1500 * 100 = 27.1333333333333%

Total operating expenses 17480 - 16605 = 875 875 / 16605 * 100 = 5.26949713941584%

Net Income before federal income tax 99905 - 84645 = 15260 15260 / 84645 * 100 = 18.0282355720952%

Federal income tax -12123 - (-11800) = -323 -323 / -11800 * 100 = 2.73728813559322%

Net income after federal income tax 87782 - 72845 = 14937 14937 / 72845 * 100 = 20.5051822362551%
Vertical Analysis
Professor Office's Beach Cabana Balance Sheets
As of December 31, 2014 and 2013

Particular 2014 2013

Assets % Change % Change
Cash 33000 / 524000 * 100 = 6.297709% 28000 / 466000 * 100 = 6.00858%
Marketable securities 20000 / 524000 * 100 = 3.816793% 22000 / 466000 * 100 = 4.72103%
Notes Receivable 5000 / 524000 * 100 = 0.954198% 3000 / 466000 * 100 = 0.6437768%
Accounts Receivable 50000 / 524000 * 100 = 9.54198% 56000 / 466000 * 100 = 12.017167%
Merchandise Inventory 70000 / 524000 * 100 = 13.358778% 43000 / 466000 * 100 = 9.2274678%
Prepaid expenses 6000 / 524000 * 100 = 1.145038% 4000 / 466000 * 100 = 0.858369%
Total current assets 184000 / 524000 * 100 = 35.1145% 156000 / 466000 * 100 = 33.47639%

Property, plant, and

340000 / 524000 * 100 = 64.88549% 310000 / 466000 * 100 = 66.5236%
equipment
Total assets 524000 / 524000 * 100 = 100% 466000 / 466000 * 100 = 100%

Liabilities
Accounts payable 41000 / 524000 * 100 = 7.8244% 38000 / 466000 * 100 = 8.154506%
Salaries payable 2000 / 524000 * 100 = 0.381679% 3500 / 466000 * 100 = 0.751%
Taxes payable 4000 / 524000 * 100 = 0.763358% 2000 / 466000 * 100 = 0.42918%
Total current liabilities 47000 / 524000 * 100 = 8.96946% 43500 / 466000 * 100 = 9.3347%

Bonds payable, 5% 100000 / 524000 * 100 = 19.0839% 100000 / 466000 * 100 = 21.4592%
Total liabilities 147000 / 524000 * 100 = 28.0534% 143500 / 466000 * 100 = 30.79399%

Stockholder's equity:
Preferred stock 6%, 40000 / 524000 * 100 = 7.63358% 40000 / 466000 * 100 = 8.58369%
Common stock 175000 / 524000 * 100 = 33.3969% 145500 / 466000 * 100 = 31.223175%
Retained earnings 162000 / 524000 * 100 = 30.916% 137000 / 466000 * 100 = 29.399%
Total stockholder's equity 377000 / 524000 * 100 = 71.9465% 322500 / 466000 * 100 = 69.206%

Total liabilities and

524000 / 524000 * 100 = 100% 466000 / 466000 * 100 = 100%
stockholders equity
Professor Office's Beach Cabana Annual INCOME STATEMENTS
For years Ended 2014 and 2013
2014 2013
Revenue % Change % Change
Sales 225000 / 225000 * 100 = 100% 195000 / 195000 * 100 = 100%
Less: Sales returns and allowances -3840 / 225000 * 100 = -1.7066666% -2750 / 195000 * 100 = -1.410256%
Net Sales 221160 / 225000 * 100 = 98.29333333% 192250 / 195000 * 100 = 98.5897%

Cost of goods sold

Merchandise inventory, January 1 66000 / 225000 * 100 = 29.333333333% 72000 / 195000 * 100 = 36.923076%

Purchases less returns and

98000 / 225000 * 100 = 43.555555555% 80000 / 195000 * 100 = 41.02564%
allowances

Total Cost of merchandise

164000 / 225000 * 100 = 72.88888888% 152000 / 195000 * 100 = 77.94871%
available for sale

Less: Merchandise inventory,

-60225 / 225000 * 100 = -26.766666% -61000 / 195000 * 100 = -31.282051%
March 31

Cost of goods sold 103775 / 225000 * 100 = 46.122222% 91000 / 195000 * 100 = 46.66666666%
Gross Profit 117385 / 225000 * 100 = 52.1711111% 101250 / 195000 * 100 = 51.9230769%

Operating expenses

Delivery expenses 467 / 225000 * 100 = 0.207% 200 / 195000 * 100 = 0.1025641025%

Depreciation expense-equipment 3600 / 225000 * 100 = 1.6% 3600 / 195000 * 100 = 1.8461538461%
Payroll taxes expense 388 / 225000 * 100 = 0.1724444444% 295 / 195000 * 100 = 0.151282%
Salary expense 10739 / 225000 * 100 = 4.7728888889% 10500 / 195000 * 100 = 5.3846%
Supplies expense 204 / 225000 * 100 = 0.09066666667% 300 / 195000 * 100 = 0.153846%
Telephone expense 175 / 225000 * 100 = 0.077777778% 210 / 195000 * 100 = 0.10769230769%
Utilities expense 1907 / 225000 * 100 = 0.8475555555% 1500 / 195000 * 100 = 0.7692307692%

Total operating expenses 17480 / 225000 * 100 = 7.768888889% 16605 / 195000 * 100 = 8.515384615%

Net Income before federal income

99905 / 225000 * 100 = 44.4022222% 84645 / 195000 * 100 = 43.40769230%
tax

Federal income tax -12123 / 225000 * 100 = -5.388% -11800 / 195000 * 100 = -6.051282%

Net income after federal income

87782 / 225000 * 100 = 39.0142222% 72845 / 195000 * 100 = 37.35641%
tax
Ratio Analysis

Particular 2014 2013

Current Ratio =
Current Assets / Current 184000 / 47000 = 3.91489 156000 / 43500 = 3.58620689
liabillity
Quick Ratio =
184000 - 70000 - 6000 / 47000 = 156000 - 43000 - 4000 / 43500 =
Current Assets - Inventory -
113999.87 112999.9
Prepaid / Current Liabillity

Profit Margin =
87782 / 225000 * 100 = 39.014222 72845 / 195000 * 100 = 37.35641
Net Profit / sales * 100

Gross Profit Margin =

117385 / 225000 * 100 = 52.1711111 101250 / 195000 * 100 = 51.923
Gross Profit / Sales * 100

Debt Ratio =
147000 / 524000 = 0.28053435 143500 / 466000 = 0.3079
Total Liabillity / Totail Assets

Cash Ratio =
33000 / 47000 = 0.702127 28000 / 43500 = 0.643678
Cash / Current liabillity

Interest Coverage =
Earning before Intersest & 99905 / Interest are not given 84645 / Interest are not given
Taxes / Intersest