Carla L. Mathis
August 3, 2010
This summary seeks to explain financial transactions that have occurred during the final season of the operation of the Lemonade Stand. The preparer has aggregated the data in an effort to fairly and accurately present a financial picture for the Lemonade Stand. Financial Position Summary
Refer to Appendix I for Season One, Two, and Three Income Statement and Balance Sheet Income Statement:
The earnings from Season One, Season Two, and Season Three were favorable. The number of units sold remained fairly consistent across all seasons, but expenses were minimal during Season Two and Season Three. Balance Sheet:
The Stand’s liabilities remained low but increased in Season Three. The owner took more risks which resulted in increased revenues and improvement in the owner’s equity. Return on Equity:
The Stand was profitable in all seasons of operation. The Stand has generated a good return on the investment of the owners showing a profit of sixty-eight cent on the dollar during Season Three. The strategies used during the previous season seem to be working for the owner. Return on Assets:
The ROA indicated that wise choices in allocating resources were achieved and remain consistent with Season Two. Profit Margin
The Stand is maintaining its ability to control its cost hereby sustaining profitability. Current Ratio
The Stand remains positioned to pay its financial obligations. However, its current ratio decreased by approximately forty-six percent, indicating that the risks taken in buying and selling were great but not costly. The financial health is good. Cash Ratio
The cash ratio decreased. Because of the instability of the Stand, the creditors may proceed with caution.
At this time, the Stand is at risk.
Based on the calculations, the company is in strong financial health and operating on assets rather than liabilities....