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Financial Statement Analysis Case

Founded in the early 1980s, the Vermont Teddy Bear Co. designs and manufactures American-made teddy bears and markets them primarily as gifts called Bear-Grams or Teddy Bear-Grams. Bear-Grams are personalized teddy bears delivered directly to the recipient for special occasions such as birthdays and anniversaries. The Shelburne, Vermont, companys primary markets are New York, Boston, and Chicago. Sales have jumped dramatically in recent years. Such dramatic growth has significant implications for cash flows. Provided below are the cash flow statements for two recent years for the company.

			Current Year				Prior Year
Cash flows from operating activities:
	Net income		$	17,523			$	838,955
	Adjustments to reconcile net income to net cash provided by operating activities
	Deferred income taxes			(69,524	)			(146,590	)
	Depreciation and amortization			316,416				181,348
	Changes in assets and liabilities:
	Accounts receivable, trade			(38,267	)			(25,947	)
	Inventories			(1,599,014	)			(1,289,293	)
	Prepaid and other current assets			(444,794	)			(113,205	)
	Deposits and other assets			(24,240	)			(83,044	)
	Accounts payable			2,017,059				(284,567	)
	Accrued expenses			61,321				170,755
	Accrued interest payable, debentures							(58,219	)
	Other							(8,960	)
	Income taxes payable							117,810
Net cash provided by (used for) operating activities				236,480				(700,957	)
Net cash used for investing activities				(2,102,892	)			(4,422,953	)
Net cash (used for) provided by financing activities				(315,353	)			9,685,435
Net change in cash and cash equivalents				(2,181,765	)			4,561,525
Other information:
	Current liabilities		$	4,055,465			$	1,995,600
	Total liabilities			4,620,085				2,184,386
	Net sales			20,560,566				17,025,856

(b) Evaluate Vermont Teddy Bears liquidity, solvency, and profitability for the current year using cash flow-based ratios. (Round answers to 3 decimal places, e.g. 52.752 or 52.752%.)

Liquidity			: 1
Solvency			: 1
Profitability			%

Financial Statement Analysis Case Founded in the early 1980s, the Vermont Teddy Bear Co. designs and manufactures American-made teddy bears and markets them primarily as gifts called Bear-Grams or Teddy Bear-Grams. Bear-Grams are personalized teddy bears delivered directly to the recipient for special occasions such as birthdays and anniversaries. The Shelburne, Vermont, companys primary markets are New York, Boston, and Chicago. Sales have jumped dramatically in recent years. Such dramatic growth has significant implications for cash flows. Provided below are the cash flow statements for two recent years for the company. Current Year Prior Year Cash flows from operating activities: Net income $ 17,523 $ 838,955 Adjustments to reconcile net income to net cash provided by operating activities Deferred income taxes (69,524 ) (146,590 ) Depreciation and amortization 316,416 181,348 Changes in assets and liabilities: Accounts receivable, trade (38,267 ) (25,947 ) Inventories (1,599,014 ) (1,289,293 ) Prepaid and other current assets (444,794 ) (113,205 ) Deposits and other assets (24,240 ) (83,044 ) Accounts payable 2,017,059 (284,567 ) Accrued expenses 61,321 170,755 Accrued interest payable, debentures (58,219 ) Other (8,960 ) Income taxes payable 117,810 Net cash provided by (used for) operating activities 236,480 (700,957 ) Net cash used for investing activities (2,102,892 ) (4,422,953 ) Net cash (used for) provided by financing activities (315,353 ) 9,685,435 Net change in cash and cash equivalents (2,181,765 ) 4,561,525 Other information: Current liabilities $ 4,055,465 $ 1,995,600 Total liabilities 4,620,085 2,184,386 Net sales 20,560,566 17,025,856 (b) Evaluate Vermont Teddy Bears liquidity, solvency, and profitability for the current year using cash flow-based ratios. (Round answers to 3 decimal places, e.g. 52.752 or 52.752%.) Liquidity : 1 Solvency : 1 Profitability %

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