AVERY PRODUCTS, INC.

BALANCE SHEET

1988 1994 1995

Cash $ 41,000 $ 61,000 $ 28,600
Accounts receivable $ 163,000 $ 245,000 $ 277,400
Inventory $ 204,000 $ 306,000 $ 510,000
Total current assets $ 408,000 $ 612,000 $ 816,000

Land and building $ 61,000 $ 49,000 $ 130,600

Machinery $ 81,600 $ 151,000 $ 118,300
Other fixed assets $ 49,000 $ 28,600 $ 8,200
Total assets $ 599,600 $ 840,600 $ 1,073,100

Notes payable, bank ‑ ‑ $ 102,000

Accounts and notes payable $ 90,000 $ 98,000 $ 155,000
Accruals $ 40,800 $ 49,000 $ 57,000
Total current liabilities $ 130,800 $ 147,000 $ 314,000

Mortgage $ 61,000 $ 45,000 $ 40,800

Common stock $ 365,000 $ 365,000 $ 365,000
Retained earnings $ 42,800 $ 283,600 $ 353,300
Total liability and equity $ 599,600 $ 840,600 $ 1,073,100
 1996
$ 20,400 $ 20,400 inventory turnover 7X $ 71,400
$ 388,000 $ 887,596
$ 826,200 $ 328,600
$ 1,236,596 $ 1,236,596
cash $ 20,400
$ 122,400 net income $ 53,400
$ 102,000 depreciation $ 122,400
$ 6,100 daily acc receivable $ 7,800
$ 1,465,100

$ 286,000
$ 306,000
$ 77,500
$ 669,500

$ 36,700
$ 365,000
$ 393,900
$ 1,465,100
AVERY PRODUCTS, INC.
INCOME STATEMENT

1994 1995 1996

Net sales $ 2,652,000 $ 2,754,000 $ 2,856,000
Cost of goods sold $ 2,121,600 $ 2,203,200 $ 2,284,800
Gross operating profit $ 530,400 $ 550,800 $ 571,200

General administration and sellin $ 204,000 $ 224,400 $ 244,800

Depreciation $ 81,600 $ 102,000 $ 122,400
Miscellaneous $ 40,800 $ 85,700 $ 122,400
Net income before taxes $ 204,000 $ 138,700 $ 81,600
Taxes -35% $ 71,400 $ 48,545 $ 28,560
Net income $ 132,600 $ 90,155 $ 53,040
sales $ 2,900,000 = 7x $ 414,286
inventory

inventory= $ 414,286

actual -average= $ 826,200 $ 414,286 = $ 411,914

 1988 1994 1995 1996 Industry
Quick Ratio 1.5596 2.0816 0.9745 0.6130 1
Current ratio 3.1193 4.1633 2.5987 1.8470 2.7
Inventory turnover 5.4000 3.4198 7x
Average collection period 33.7198 36.7651 49.5868 32 days
Fixed‑asset turnover 11.34 11.71 13x
Total asset turnover 2.8782 2.2504 2.6x
Return on total assets 9.42% 4.18% 11.70%
Return on net worth 3.10% 1.71% 23.40%
Debt ratio 27.90% 21.19% 41.36% 84.15% 50.00%
Profit margin on sales 5.00% 3.27% 1.86% 4.50%

Quick Ratio The quick ratio is decreasing from 1994 to 1996, we can observe
that both, quick assets and current liabilities are increasing, but the
current liabilities are increasing faster than the assets. This means
that for every asset increase in Avery Products Inc. is having, the
more is the liability.

Current Ratio The Current Ratio is decreasing from 1994 to 1996, the current
assets are increasing through these periods, but the current
liabilities are also increasing but more faster than the assets and we
can observe that since 1995 is below the Industry ratio.

Inventory Turnover
2

$ 326,400 $ 163,200
$ 254,247 $ 127,124
$ 290,324