BL Landscapes Inc Mini Practice Part 3 Bill Graham and Lory

B&L; Landscapes, Inc. Mini Practice Part 3 Bill Graham and Lory Miller incorporated B&L; Landscapes Inc on July 1,2016 The business consists of lawn care and sprinkler system installations In addition, they also sell two types of At the end of the first year, 8 and Lary have asked you to andlyze their first year of operations and given them some suggestions on areas that may need improvement as they move into their second year Below are the bolance sheets for the date of incorporation and the end of the first year of S&L; Landscapes, Inc. Bolance Sheet July 1, 2016 Current Assels 29.500 Accounts Receivable (net) Prepoid Insurance Total Current Assets Property, Plant and Equipment Land 9.000 Total Assets 97.1 Liabilities and Stockholders\' Equity Current Liobilifies Accounts Payable Long-Term Liabililities Notes Payable Totol iabiities Stockholders Equity Paid-in Capital Capital Stock 5% Preferred stock, $100 por vote. $10.000 45.000 7.000 5.000 shares o noted, 70 shares ssued and outstanding Common stock $1 par value. 150.000 shores outhorized. 35.100 shares issued and outstanding Tofol Copital Stock Retained Eamings Total Stockholders Equity Total Liabilities and Stockholders\' Equity 35.100 42.100 2 100

Solution

The following need investigation :

a. Theindustry average for current assets is 45% , where as the company\'s current aset proportion is 56%. This needs to be investigated as higher investment in working capital (current assets) means higher financing cost. (Financing cost for current assets is higher than long term assets).

b. Percentage of retained earnings is 22% for the company whereas the industry average is 37%.This implies that the company\'s profitbaility is lower than the industry average, as the retained earnings is the earned capital of the company. The company should investigate the operations of the company.

3.

Horizontal Analysis
B&L LANDSCAPES INC.
Condensed Balance sheets
for the years ending June 30
	2017	2016	Increase/(Decrease)
Amount	Percentage
Assets:
Current Assets	76125	35600	40525	114%
Plant Asset (net)	60975	61500	-525	-1%
Total Assets	137100	97100	40000	41%
Liabilities
Current Liabilities	19500	10000	9500	95%
Long-term Liabilities	45000	45000	0	0%
Total Liabilities	64500	55000	9500	17%
Stockholders\' Equity
Prefered Stock	7000	7000	0	0%
Common Stock	35100	35100	0	0%
Retained Earnings	30500	0	30500
Total stockholders\' equity	72600	42100	30500	72%
Total liabilities and stockholders\' equity	137100	97100	40000	41%