Question

# Based on your review of the financial statements, would you invest in this company? Why or...

Based on your review of the financial statements, would you invest in this company? Why or why not? Detail your decision-making process.Based on your review of the financial statements, would you invest in this company? Why or why not? Detail your decision-making process.

What was the company’s total sales revenue for the most recent year? What was their cost of goods sold?   What was their gross profit? Calculate their gross profit percentage. Show calculations.

Most recent year is Dec 31, 2017.

Total sales revenue of the year 2017 is \$177,866.

Cost of the goods sold of the year 2017 is \$111,934.

Gross profit of the year 2017 = Total sales revenue - Cost of goods sold

= \$177,866 - \$111,934

= \$65,932

Gross profit percentage of the year 2017 = (Gross profit / Total sales revenue) ×100

= (\$65,932 / \$177,866) ×100

= 37.07%

Total assets for the most recent date (Dec 31, 2017) is \$131,310.

Total liabilities for the most recent date (Dec 31, 2017) is \$103,601.

Working note:

Total liabilties = Total current liabilities + Long term debt + Other long-term liabilities

= \$57,883 + \$24,743 + \$20,975

= \$103,601

On the Basis of Given Data to Review of Financial Statements, while having the decision that whether to invest or not it can be seen that the company is having a high gross profit ratio i.e. 37.07% that is good as the company seems to be having high profitability to sustain in the Competitive Environment, further any more decision can be concluded by looking to Indirect Expenses of the Company

Also, it can be seen that The Equity of the Company is Rs-27709/-(131310-103601) and the Debt of the Company are Rs-45718/-(24743+20975), on calculating the debt-equity ratio it comes to 1.64:1 which is high than the normal debt equity of 1:1

Although the Company has having a high debt-equity ratio compared to the industry average, the gross profit ratio is a bit high to observe the Interest Exp. so it can be concluded that the Company is Good in Investing for Long Term

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