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6. Prepare the following financial statement analysis for the 2017 and 2016.
Define each measure and whether the Summer Company did better or worse
and why?
A. Current ratio.
B. Quick ratio.
C. Rate of Return on Total Assets.
D. Rate of Return on Common Stockholders' Equity.
E. Earnings Per Share on Common Sock. (When computing the earnings per
share assume there is no Treasury Stock). Use the outstanding shares as of
12/31/2017 for 2017 and the outstanding shares as of 12/31/ 2016 for 2016. Do
not use the weighted average outstanding shares.
F. Accounts Receivable Turnover. Assume all Sales are on account.
G. Average collection period. Assume all Sales are on account.
H. Inventory Turnover.
I. Debt to equity ratio
J. Times Interest Earned Ratio.
K. Price Earnings Ratio.
L. Operating Cash Flow to current liability ratio
M. Vertical analysis for the Income Statement for 2017 and 2016.

PART 6 A.
Current Ratio			2017		2016
	Current assets/		$ 478,250		$ 329,150
	Current liabilities		$ 56,000		$ 48,000
			8.5		6.9
Strengths and Weaknesses
The current ratio measures the ability for a company to pay it's current liabilities with it's current assets and still have funds for daily operations. The finnal ratios indicate how many dollars of current assets it has to cover each dollar of liabilities. Sunny increased this ratio from 2016 to 2017, indicateing better management of assets.
PART 6 B.			2017		2016
Quick Ratio	(Cash & equivalents+		$ 176,200		$ 253,100
	Short investments+
	Accnts reveivable)/		$ 238,850		$ 31,850
	Current liablilities		$ 56,000		$ 48,000
			7.4		5.9
Strengths and Weaknesses
The quick ratio measures the relationship between the liquid assets and current liabilities of a company. This ratio serves the same basic purpous of measuring the ability to pay off liabilities as the current ratio does, but is more accurate because it does not include potentionally illiquid assets such as invintory. Sunny's quick ratio increased simularly to it's current ratio affirming it's ability to pay off current debt.
PART 6 C.			2017		2016
Rate of Return on Total Assets	Net income/		$ 27,100		$ 70,100
	Avg. total assets		$ 1,049,800		$ 963,700
			2.6%		7.3%
Strengths and Weaknesses
The return on total assets ratio reveals the income earned per dollar of assets a company has and is an overall measure of a firms profitablility. Sunny's rate of return on total assets declined from 2016 to 2017 quite significantly. This indicates that sunny is making much less income per asset in 2017, in fact they are making much less income in general.
PART 6 D.
Rate of Return on Common Stockholder's Equity			2017		2016
	(Net income-		$ 27,100		$ 70,100
	Prefered stock dividends)/		$ -		$ -
	Avg common stockholders equity		$ 693,800		$ 553,700
			3.9%		12.7%
Strengths and Weaknesses
The rate of return on common stockholder's equity measures the profitability of the ownership interest held by a company's stockholders, essensially showing the persentage of income avalible to common stockholders for each dollar of common stockholder's equity invested into the business. Sunny's return on common stockholder's equity ratio decreased signifigantly in 2017 compaired with 2016. Simularly to the return on total assets, the change was majorly effected by the net income change.
PART 6 E.			2017		2016
Earnings Per Share	(Net income-		$ 27,100		$ 70,100
	Prefered stock dividends)/		$ -		$ -
	Avg. # common shares outstanding		361900		311900
			$ 0.07		$ 0.22
Strengths and Weaknesses
Earnings per share is the amount of net income avalible to common stockholders each common share is worth. Sunny's earnings per share droped 3 times lower in 2017 from 2016. This would be a bad sign for investors.
PART 6 F.			2017		2016
Accounts Receivable Turnover	Net sales/		$ 260,000		$ 521,000
	Avg accnts receivable		$ 135,350		$ 49,600
			1.92		10.50
Strengths and Weaknesses
Accounts receivable turnover indicates how many times a year on average accounts recievable is collected, essentially being a measure of how quickly recievables are converted to cash. Sunny's receivables turnover decreased very significantly from 2016 to 2017. This shows that Sunny is converting it's accounts receivable much slower in 2017.
PART6 G.			2017		2016
Average Collection Period	365/accnts receivable turnover		190	Days	35	Days
Strengths and Weaknesses
The average collection period reveals how many days on average it take to collect accounts recivable. Sunny's average collection period increased significantly from 2016 to 2017, similarly to it's accounts receivable turnover. This is most likely due to the relitively big change in net sales, but is also most likely due to various accounts receivable issues such as customer's deteriating cash flows.
PART 6 H.			2017		2016
Merchandise Inventory Turnover	GoGS/		$ 200,000		$ 387,500
	Avg invintory		$ 52,500		$ 86,250
			3.8		4.5
Strengths and Weaknesses
Invintory turnover indicates if the invintory on hand is diportionate to the amount of sales revenue. Sunny's invintory ratio descreased slightly from 2016 to 2017. This change could deter some investers as a higher turnover is generally preferred.
PART 6 I.			2017		2016
Debt to Equity Ratio	Liablities/		$ 300,500		$ 411,500
	Stockholders equity		$ 803,850		$ 583,750
			0.37		0.70
Strengths and Weaknesses
The debt to equity ratio measures the extent that stockholders are relied on versus creditors to provide financing. Sunny's debt to equity ratio decreased from 2016 to 2017, indicating greator creditor protection.
PART 6 J.			2017		2016
Times Interest Earned	Income B4 interest exp & income tax/		$ 39,000		$ 97,000
	Interest expense		$ 3,900		$ 5,900
			10.0		16.4
Strengths and Weaknesses
The times interest earned ratio evaluates the ability to pay current interest expense with net income. Sunny's times interest earned ratio decreased from 2016 to 2017 but it is still very capable of paying it's expense several times over.
PART 6 k.			2017		2016
Price Earnings Ratio	Market price per share/		$ 10		$ 10
	Earnings per share		$ 0.07		$ 0.22
			133.5		44.5
Strengths and Weaknesses
The price earnings ratio shows how a share's market price compairs with it's earnings. Sunny's price earning ratio significantly increased from 2016, posibly indicating overvaluation in 2017 because of decreased earnings.
PART 6 L.			2017		2016
Operating Cash Flow to Current Liabilitey Ratio	Cash flow from op activities/		$ (169,900)		$ 188,600
	Avg current liabilities		$ 52,000		$ 61,000
			-3.27		3.09
Strengths and Weaknesses
Operating cash flow to current liabilities ratio is another indication of a firm's ability to pay current obligations. Instead of any kind of asset, it uses operating cash flow. This ratio for sunny decreased greatly because of a major decline in operating cash flow. This could indicate a major issue for sunny as many investers like to see plenty of cash flow coming from operations rather than investments or financing.
PART 6 L. Vertical Analysis
Income statement
		2017	Common- size	2016	Common-size
Sales		$260,000	100.00%	$521,000	100.00%
less: Cost of Merchandise Sold		200,000	76.92%	387,500	74.38%
Gross Profit		60,000	23.08%	133,500	25.62%
less: Operating Expenses; excluding Depreciation		11,000	4.23%	8,500	1.63%
Depreciation Expense		20,000	7.69%	20,000	3.84%
Income from Operations		$29,000	11.15%	$105,000	20.15%
Add: Other Income: Gain on sale of equipment		10,000	3.85%	0	0.00%
Less: Other Expenses: Loss on sale of equipment			0.00%	8,000	1.54%
		$39,000	15.00%	$97,000	18.62%
Less: Interest Expense		3,900	1.50%	5,900	1.13%
Income before Income Tax		$35,100	13.50%	$91,100	17.49%
Less: Income Tax expense		8,000	3.08%	21,000	4.03%
NET INCOME		$27,100	10.42%	$70,100	13.45%
Strengths and Weaknesses
Using vertical analysis to analyse a firm can help compare how well the firm manages and controls it's various expenses while the level of it's sales fluxuates over time. Analysing Sunny this way reveals in what ways it might be doing better or worse in 2017 compaired to 2016. Shading in persentages that indicate less revenue or more expenses red reveals that 2017 probuably was a worse year over all for Sunny. Looking deeper into the differences, there are no common-size persentages differing more than 10%, many differing less than 4%. Income from operations has the biggest change, and it's for the worst. Most investers like to see more positive operating cash flow than income from any other sources such as Sunny's gain on sale of equipment. At the end of the income statement, there are also some negitive changes in common-size from 2016 to 2017. Both net income before and after income tax decreased between 3 and 4%.

	7. From your analysis, summarize the major strenths and weaknesses comparing
	Summer's 2017 and 2016 performance. Summarize part 6 A through M.

Just need 7 answered based on what I answered for 6.

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