Complete a full analysis of the company. Has to include insights o...

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Complete a full analysis of the company.
Has to include insights on Income Statement, Vertical analysis, balance sheet, ratio analysis (very important) and cash flow statement as neat as possible.
Data and info:

Reliable industry average information was available for Universal Connector, a public company, in 2008. These ratios are contained in Exhibit 3.
Strong Tie had a $2,000,000, five-year, revolving credit agreement with the Bank of Nova Scotía, which was used to finance the company's working capital requirements as well as a number of individual term loans to finance fixed assets,
The revolving credit agreement was committed, so as long as the loan conditions were met, financing was guaranteed The loan had to be secured 100 per cent by accounts receivable and inventory. The receivables were primarily with large retail chains that were in good financial health, so the Bank of Nova Scotia was prepared to lend 90 per cent of their value. They were also willing to lend 60 per cent of the value of the finished goods and work-in process inventory because of a strong re-sale market and the short production process. The bank would only lend 40 per cent of the value of raw materials inventory due to general instability in the commodities market. The revolving credit agreement had to be paid down to zero at least once per year.
All loans required that the company maintain a Current Ratio of 1.5 or higher, a Cash Flow Coverage Ratio of 1.0 or higher and a Long-term Debt to Total Capitalization Ratio of 40 per cent or less. Audited quarterly and annual financial statements also had to be provided to the bank each quarter.
As the sole owner of the corporation, David Johnstone did not take a salary, but his three daughters received over $1,000,000 in salary and bonuses each year. Preferred dividends of $500,000 were paid out to Mr. Johnstone's sister Katherine, who chose not to participate in the management of the business but was promised a regular income by her late father in lieu of receiving a share of the business. These dividends had to be paid unless the company entered bankruptcy.

                                           2006         2007         2008
Net Sales                        $16,200    $17,450    $16,500
Cost of Goods Sold          10,445       11,956      11,950
Gross Profit                      $5,755       $5,494      $4,550
Selling and Administration 3,054       3,130       3,379
Depreciation                        396            720          756
Operating Income             $2,305      $1,644       $415
Other Income
Interest Income                      21            10             2
Other Expense
Interest Expense                246            291          407
Income Before Taxes       $2,080      $1,363         $10
Income Taxes                     624            409             3
Net income                        $1,456       $954            $7

Exhibit 2
                                           2006         2007          2008
Current Assets
Cash                                    $234         $122          $61
Temporary Investment       1,034          488             99
Accounts Receivable, Net   3,250       3,450         2,854
Raw Materials Inventory      1,025       1,350         1,395
WIP Inventory                      200            138            42
Finished Goods Inventory   2,030       1,700         1,200
Prepaid Expenses                182            143            188
Total Current Assets          $7,955       $7,391       $5,839
Fixed Assets
Land Plant, and Equipment $4,893      $7,076       9,590
Less: Accumulative Depreciation
                                              1,380       2,100       2,856
Net Land, Plant, Equipment   3,513       4,976         6,734
Total Assets                        $11,468    $12,367    $12,573
Current Liabilities
Accounts Payable                $534          $543            500
Income Taxes Payable          54               35               23
Current Portion of Long-term Debt   
                                             1,000         1,145       1,340
Total Current Liabilities       $1,588       $1,723       $1,863
Long-term Liabilities             3,190         3,500         4,059
Shareholders' Equity
Common Shares                  1,350          1,350       1,350
Retained Earnings                5,340          5,794       5,301
Total Shareholders' Equity   $6,690       $7,144      $6,651
Total Liabilities and Shareholders' Equity
                                           $11,468      $12,367   $12,573

Exhibit 3
Ratio                                                   Industry Average
Current Ratio                                                4
Cash Ratio                                                    5
Raw Materials Turnover in Days                31 days
WIP Turnover in Days                                  3 days
Finished Goods Turnover in Days             51 days
A/R Turnover in Days                                 63 days
A/P Turnover in Days                                 11 days
Cash Conversion Cycle                            137 days
Fixed Asset Turnover                                    4.1
Total Asset Turnover                                     1.7
Long-term Debt to Total Capitalization          35%
Cash Flow Coverage                                     2
Gross Profit Margin                                     32%
Operating Profit Margin                               16%
Net Profit Margin                                          10%
ROA                                                             17%
ROE                                                             28%

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Background about the company:
The company has been running on the revolving credit provided by Nova scotia bank. The financial statements have been analysed in comparision to industrial averages to provide a deeper insight into the actual performance ot the company over the year period between 2006 to 2008.
Insights into Income statement:
From a high of $17450 of previous year, sales has depleted over the current year to $16500, while cost of goods sold has not been brought down thereby leading to a depletion of Gross profit margins. Administrative expenses has also increased from $3379 from $3130 of previous year, which has further reduced the Net profit margin of the current year. Interest income has come down by 80% - from 10...

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