SEACLIFF COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31-Dec
2005 2004
ASSETS

Current Assets 390,000.00 288,000.00

Plant and Equipment (net) 500,000.00 467,000.00
Other Assets (loans to Officers) 60,000.00 105,000.00

TOTAL ASSETS 950,000.00 860,000.00

LIABILITIES AND STOCKHOLDERS EQUITY

LIABILITIES
Current Liabilities 112,000.00 94,000.00
12% long-term note payable (due in 7 years) 200,000.00 250,000.00
Total Liabilities 312,000.00 344,000.00

STOCKHOLDERS EQUITY:
9% Preferred stock ,Php 100 Par 100,000.00 100,000.00
Common Stock , Php 50 par 250,000.00 200,000.00
Additional paid in capital 70,000.00 40,000.00
Retained Earnings 218,000.00 176,000.00
Total Stockholders' Equity 638,000.00 516,000.00

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY 950,000.00 860,000.00

SEACLIFF COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended December 31, 2005 and 2004

2005 2004

Net Sales 900,000.00 750,000.00

Cost of goods SoldGross Profit on sales 530,000.00 420,000.00
Gross Profit on sales 370,000.00 330,000.00
Operating Expenses
selling 117,000.00 75,000.00
General and Administrative Expenses 126,000.00 95,000.00
Total Operating Expenses 243,000.00 170,000.00

Operating Income 127,000.00 160,000.00

Interest Expense 24,000.00 30,000.00
Income before Income tax 103,000.00 130,000.00
Income taxes 28,000.00 40,000.00
Net Income 75,000.00 90,000.00
SEACLIFF COMPANY
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
For the year ended December 31, 2005 and 2004

2005 2004

Retained Earnings Beginning of Year 176,000.00 115,000.00

Net Income 75,000.00 90,000.00
251,000.00 205,000.00
Less: Dividends on common Stock P 5 per share
in 2004 ,4.80 per share in 2005 24,000.00 20,000.00
Dividends on preferred Stock ( P 9 per share) 9,000.00 9,000.00
33,000.00 29,000.00

Retained Earnngs end of year 218,000.00 176,000.00

SEACLIFF COMPANY
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
For the year ended December 31, 2005 and 2004

2005 2004
Cash flows from Operating Activities
Net Cash flows from operating Activities 19,000.00 95,000.00

Cash flows from Investing Activities

Purchases of Plant Assets (63,000.00) (28,000.00)
Collections of Loan from Officers 45,000.00 (35,000.00)
Net cash used by investing activities (18,000.00) (63,000.00)

Cash flows from financing Activities

Dividends Paid (33,000.00) (29,000.00)
Repayment of Long term debt (50,000.00)
Proceeds from issuing capital stock 80,000.00
Net cash used by financing activities (3,000.00) (29,000.00)

Net Increase (decrease) in cash and cash equivalents (2,000.00) 3,000.00

Cash and cash equivalents begginning of year 40,000.00 37,000.00

Cash and Cash Equivalents end of the year. 38,000.00 40,000.00

SEACLIFF COMPANY
NOTES TO FINANCIAL STATEMENTS
Decenber 31, 2005

Note 1 Accounting Policies

Inventories - Inventories are determined by the FIFO method.
Depreciation is computed by the straight line method. Buildings
are depreciated over 40 years. And equipment and fixtures over
periods of 5 or 10 years.

Note 2. Unused Lines of Credit.

the company has a confirmed line of credit in the aount of $35,000
None was in used at December 31, 2005.

Note 3 Contingencies and Commitments

As of December 31, 2005 ,the company has no material commintment or
non cancellable obligations . There are currently no loss contingencies
known to management

Note 4 Current Values of financial Instruments

All financial instuments that appear in the financial statements
closely approximate their current values.

Note 5 Concentration of Credit Risk

The company engages in retail sales to the general public from a single
no individual customer accounts for more than2% of the company's
total sales or accounts receivables. Accounts receivables are unsecured.

Required: 1. Analyze financial statements from the view points of common

stockholders, creditors and others.
a. Earnings per share of common stock.
b. Price Earnings Ratio
c. dividend Yield. Market value per share: P 160 Dec. 31. 2004; P132 Dec. 31. 2005
2. Revenue and Expense analysis. Does a higher operating expense ratio
indicate higher net income?
3. Compute earnings realated to investment in assets
4. Compute Return on common stockholder equity. Does the use of leverage
benefit common stockholders/
5.Debt Ratio
6. Accounts Receivable turn over. Are customers paying promptly?
7. Compute the financial ratios and other measurements and explain their
significance
II. Assume that you are a financial analyst and that two of your clients are rquesting
your advice on certaincompanies as potential investments. Bothe clients are
interested in purchasing common stock . One is primarily interested in the
 dividends to be received from the investment. The second is primarily interested
in the growth of the market value of the stock. What information would you
advice your clients to focus on in their respective analyses.

III. Assume that you have several thousand dollars to invest in the stock market .
Given that "people will always have to eat" you have decided to explore the
possibility of investing in Wendy's and Mcdonald's. Your analysis of each company's
financial statements reveals that hboth have negative working capital and both
have current and quick ratios of less than 1 to 1.
Based on your findings , should you be concerned about the short-term liquidityof
these two companies? Explain.

Submit your answer on or before April 30,2022.