Question: Describe how you would analyze the financial performance of a publicly traded corporation [Y Corporation] if you were provided with three (3) years of Y Corporation's audited financial statements, & a listing of their industry's key financial and ratio performance for the same period. Describe what specific information you would analyze and your general approach for analyzing & presenting this information. Add any caveats or disclaimers that would issue with the report.
End of Mid-term Examination
ENCLOSURE 1
[The Balance Sheet and Income Statement for Spectrum, Inc. is presented below for your use in solving problem 3]
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Spectrum, Inc.
BALANCE SHEET (000)
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Cash
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$500
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Accounts receivable
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1,500
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Inventories
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500
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Current assets
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2,500
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Net fixed assets
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5,000
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Total Assets
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$7,500
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Accounts payable
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1,200
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Bank note
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300
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Total current liabilities
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1,500
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Long term debt
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4,000
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Common stock
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300
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Retained earnings
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1,700
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Total liabilities and owner's equity
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$7,500
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Spectrum, Inc.
INCOME STATEMENT (000)
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Net sales
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$8,500
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Cost of goods sold
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3,400
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Gross profit
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5,100
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Operating expenses
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2,900
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Net operating income
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2,200
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Interest expense
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580
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Earnings before taxes
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1,620
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Income tax (34%)
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551
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Net income
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$1,069
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