You are on page 1of 11

Amanda Markwarth, Michael Mendez & Olivia Normandin

S&S Air, INC.


2014 Income Statement

Sales $ 40,259,230
Cost of Goods Sold $ 29,336,446
Other Expenses $ 5,105,100
Depreciation $ 1,804,220
EBIT $ 4,013,464
Interest $ 630,520
Taxable income $ 3,382,944
Taxes (40%) $ 1,353,178
Net Income $ 2,029,766
Dividends $ 610,000
Add to retained earnings $ 1,419,766
S&S Air, INC.
2014 Balance Sheet

Assets
Current assets
Cash $ 456,435
Accounts receivable $ 733,125
Inventory $ 1,073,180
Total current assets $ 2,262,740

Fixed Assets
Net plant and equipment $ 17,723,430

Total Assets $ 19,986,170


S&S Air, INC.
14 Balance Sheet

Liabilities and Equity


Current liabilities
Accounts payable $ 929,005
Notes payable $ 2,121,350
Total current liabilities $ 3,050,355

Long-term debt $ 5,500,000

Shareholder equity Common Stock $ 400,000


Retained earnings $ 11,035,815
Total equity $ 11,435,815
Total liabilities and equity $ 19,986,170
Question 1
Current Ratio 2,262,740/3,050,355 0.74
Quick Ratio (2,262,740-1,073,180) / 3,050,355 0.39
Cash Ratio 456,435/3,050,355 0.15
Total Asset Turnover 40,259,230/19,986,170 2.01
Inventory Turnover 29,336,446/1,073,180 27.34
Receivables Turnover 40,259,230/733,125 54.91
Total Debt Ratio (19,986,170-11,435,815) / 19,986,170 0.43
Debit-Equity Ratio 5,500,000/11,435,815 0.48
Equity Ratio 19,986,170/11,435,815 1.75
Times Interest Earned 4,013,464/630,520 6.37
Cash Coverage Ratio (4,013,464+1,804,220)/630,520 9.23
Profit Margin 2,029,766/40,259,230 5%
Return on Assets 2,029,766/19,986,170 10%
Return on Equity 2,029,766/11,435,815 18%

Question 2
No, we wouldn't choose Boeing Company as an aspirant company. We wouldn't choose them
because Boeing Company sells to large commerical companies while the others sell to individuals
or not large companys, the current ratio (.74) would be viewed as negative because it is less than
the average (1.43).

Quick Ratio: is 0.39 while the average ratio is 0.35. This is slightly above the average ratio
meaning that it would be seen as positive.

Cash Ratio: is 0.15 while the average ratio is 0.21, it is seen as negative.

Total Asset Turnover: is 2.01 while the average ratio is 0.85. This means that for every $1 in assets
the company is generating $2.01 in sales. S&S is above the industry average so this ratio is seen
as positive.

Inventory Turnover: is 27.34 while the average is 6.15. Which means it would be seen as positive.

Receivables Turnover: is 54.91 while the average is 9.82. This ratio is seen as very positive relative
to the industry.

Total Debt Ratio: was 0.43 while the industry average was 0.52. For every $1 of assets about $0.43
of that dollar is debt. S&S has less debt than the average company in this industry, therefore this
ratio would be seen as postive.

Equity Multiplier: is 1.75 while the industry average is 2.08. Their ratio is seen as negative.

Times Interest Earned: is 6.37 while the industry average is 8.06. Their ratio is seen as negative
relative to the industry.

Cash Coverage Ratio: is 9.23 while the industry average is 9.41. It is seen as negative relative to
the industry.

Profit Margin: is 0.050 while the industry average is 5.10%. It would be seen as negative relative to
of that dollar is debt. S&S has less debt than the average company in this industry, therefore this
ratio would be seen as postive.

Equity Multiplier: is 1.75 while the industry average is 2.08. Their ratio is seen as negative.

Times Interest Earned: is 6.37 while the industry average is 8.06. Their ratio is seen as negative
relative to the industry.

Cash Coverage Ratio: is 9.23 while the industry average is 9.41. It is seen as negative relative to
the industry.

Profit Margin: is 0.050 while the industry average is 5.10%. It would be seen as negative relative to
the industry.

Return on Assets: is 0.1015 while the industry average is 10.53%. S&S is lower than the average
so their ratio is seen as negative.

Return on Equity: is 0.1775 while the industry average is 18.14%. This is less than the average so
their ratio is seen as negative.

It would be appropriate to use Bombardier as an alernative company because they are the worlds
leader of both planes and trains and are award winning mobility solutions. Bombardier is also
listed on the Dow Jones Sustainability North America Index. During 2015, Bombardier posted
revenues of $18.2 Billion.

Cirrus Design Corporation would not be a good aspirant company because they only produce little
planes and jets. They don't have much varitey. And they have very low revenue.

We didn't choose Embraer because they do not just focus on one type of aircraft. They have four
different types of aircrafts that they manufacture. They create commerical aviation planes,
executive jets, defense and security planes, as well as agricultural aviation planes. We feel like we
would rather have a company that focuses on one or two types of planes, rather than four.

We didn't choose Cessna Aircraft Company because they really only make personal jets, and smal
compact planes. The maximum passenger capacity is between 9 and 12 passengers. They aren't
very diverse when it comes to their planes.
Amanda Markwarth, Michael Mendez & Olivia Normandin

dn't choose them


thers sell to individuals
because it is less than

he average ratio

at for every $1 in assets


ge so this ratio is seen

ld be seen as positive.

as very positive relative

$1 of assets about $0.43


ndustry, therefore this

een as negative.

o is seen as negative

as negative relative to

n as negative relative to
ndustry, therefore this

een as negative.

o is seen as negative

as negative relative to

n as negative relative to

wer than the average

Question 3
ess than the average so
S&S Air's sales ratio is most likely lower than other
becasue they are in the business of making custom
use they are the worlds airplanes while Boeing manufactures commercial ai
Bombardier is also to vary much.
ombardier posted

they only produce little


enue.

rcraft. They have four


aviation planes,
planes. We feel like we
ather than four.

personal jets, and small


assengers. They aren't
& Olivia Normandin
likely lower than other comapies such a Boeing
iness of making custom or single ordered
ufactures commercial airplanes that dont tend