Bigger Isn't Always Better

Solution to Case 2
Financial Ratio Analysis

Bigger Isn't Always Better!
Table I

Quickfix Autoparts

Balance Sheet

2000

2001

$155,000
10,000
250,000

$309,099
12,000
270,000

$75,948
20,000
500,000

$28,826
77,653
520,000

$18,425
90,078
560,000

$415,000

$591,099

$595 ,948

$626,480

$668 ,50 3

$250,000
(25,000)

$250,000
(50,000)

$500,000
(100,000)

$500,000
(150,000)

$500,000
(200,000)

$225 ,000

$200 ,000

$400,000

$350,000

$300,000

Total assets

$640,000

$791,099

$995,948

$976,480

$968,503

LIABILITIES AND EQUITIES
Short-term bank loans
Accounts payable
Accrua ls

$50, 000
10,000
5,000

$145,000
10,506
5,100

$140,000
19,998
7,331

$148,000
15,995
9,301

$148 ,000
16,795
11,626

$65 ,000

$160,606

$167,329

$173,296

$176,421

$63,366
175,000

$98,000
173,000

$196,000
271,000

$190,000
268,000

$183,000
264,000

Long-term debt

$238,366

$271,000

$467 ,000

$458,000

$447,000

Total liabilities

$303,366

$431,606

$634,329

$631,296

$623,421

$320,000
16,634

$320,000
39,493

$320,000
41,619

$320,000
25,184

$320,000
25,082

Total equity

$336,634

$359,493

$361,619

$345,184

$345,082

Total liabilities and equity

$640,000

$791,099

$995 ,948

$976,480

$968 ,503

ASSETS
Cash and marketable securities Accounts receivable
Inventory
Current assets
Land , buildings, plant, and equipment
Accumulated depreciation
Net fixed assets

Current liabilities
Long-term bank loans
Mortgage

Common stock (100,000 shares)
Retained earnings

1

2002

2003

2004

Table II

Quickfix Autoparts

Income Statement

2000

2001

2002

2003

$600,000
480,000

$655 ,000
537,100

$780,000
655,200

$873,600
742,560

$1,013,376
861,370

$120,000

$117,900

$124,800

$131,040

$152,006

$30,000
25,000