Kedzie Kord Company had the following balance sheets and income statements over the last three years

QUESTION

Kedzie Kord Company had the following balance sheets and income statements over the last three years (in thousands):20X120X220X3Cash$ 561$ 387$ 202Receivables1,9632,8704,051Inventories2,0312,6133,287Current assets$ 4,555$ 5,870$ 7,540Net fixed assets2,5814,4304,364Total assets$ 7,136$10,300$11,904Payables$ 1,862$ 2,944$ 3,613Accruals301516587Bank loan2509001,050Current liabilities$ 2,413$ 4,360$ 5,250Long-term debt5001,000950Total liabilities andShareholders equity4,2234,9405,704shareholders equity$ 7,136$10,300$11,904Sales$11,863$14,952$16,349Cost of goods sold8,53711,12412,016Selling, general, andadministrative expenses2,2762,4712,793Interest73188200Profit before taxes$ 977$ 1,169$ 1,340Taxes Profit after taxes390452576$ 587$ 717$ 764Using common-size and index analysis, evaluate trends in the companys financial condition and performance.
Trend Analysis 20X1 20X2 Variance 20X2 20X3 Variance Cash $561 $387 ($174) $387 $202 ($185) Receivables 1,963 2,870 $907 2,870 4,051 $1,181 Inventories 2,031 2,613 $582 2,613 3,287 $674 Current assets $4,555 $5,870 $1,315 $5,870 $7,540 $1,670 Net fixed assets 2,581 4,430 $1,849 4,430 4,364 ($66) Total assets $7,136 $10,300 $3,164 $10,300 $11,904 $1,604 Payables $1,862 $2,944 $1,082 $2,944 $3,613 $669 Accruals 301 516 $215 516 587 $71 Bank loan 250 900 $650 900 1,050 $150 Current liabilities $2,413 $4,360 $1,947 $4,360 $5,250 $890 Long-term debt 500 1,000 $500 1,000 950 ($50) Total liabilities 2,913 5,360 $2,447 5,360 6,200 $840 Shareholders equity 4,223 4,940 $717 4,940 5,704 $764 Total liabilities and Shareholders equity $7,136 $10,300 $3,164 $10,300 $11,904 $1,604 Sales $11,863 $14,952 $3,089 $14,952 $16,349 $1,397 Cost of goods sold 8,537 11,124 $2,587 11,124 12,016 $892 Selling, general, and administrative expenses 2,276 2,471 $195 2,471 2,793 $322 Interest 73 188 $115 188 200 $12 Profit before taxes $977 $1,169 $192 $1,169 $1,340 $171 Taxes 390 452 $62 452 576 $124 profit after taxes $587 $717 $130 $717 $764 $47 Cash has decreased over the years, whereas Current Assets have shown upward movement through the years. There has been decline in fixed assets in 20X3. Long term debt has also decrease in 20X3. The increase in sales from 20X2 to 20X3 has been less when compared to increase in sales from 20X1 to 20X2. Profit before taxes has increased over the years

om 20X1 to 20X3. Same trend is seen in Profit after taxes also. The amount of increase from 20X2 to 20X3 is less as compared to increase from 20X1 to 20X2. Common Size Analysis 20X1 Percent 20X2 Percent 20X3 Percent Cash $561 7.86% $387 3.76% $202 1.70% Receivables 1,963 27.51% 2,870 27.86% 4,051 34.03% Inventories 2,031 28.46% 2,613 25.37% 3,287 27.61% Current assets $4,555 63.83% $5,870 56.99% $7,540 63.34% Net fixed assets 2,581 36.17% 4,430 43.01% 4,364 36.66% Total assets $7,136 100% $10,300 100% $11,904 100% Payables $1,862 26.09% $2,944 28.58% $3,613 30.35% Accruals 301 4.22% 516 5.01% 587 4.93% Bank loan 250 3.50% 900 8.74% 1,050 8.82% Current liabilities $2,413 33.81% $4,360 42.33% $5,250 44.10% Long-term debt 500 7.01% 1,000 9.71% 950 7.98% Total liabilities 2,913 40.82% 5,360 52.04% 6,200 52.08% Shareholders equity 4,223 59.18% 4,940 47.96% 5,704 47.92% Total liabilities and Shareholders equity $7,136 100% $10,300 100% $11,904 100% Sales $11,863 100% $14,952 100% $16,349 100% Cost of goods sold 8,537 71.96% 11,124 74.40% 12,016 73.50% Selling, general, and administrative expenses 2,276 19.19% 2,471 16.53% 2,793 17.08% Interest 73 0.62% 188 1.26% 200 1.22% Profit before taxes $977 8.24% $1,169 7.82% $1,340 8.20% Taxes 390 3.29% 452 3.02% 576 3.52% profit after taxes $587 4.95% $717 4.80% $764 4.67% Share of Cash in total assets has decreased over the years, wheras the Receivables has shown an upward movement over the years. Upward movement in Current Liabilites is seen over the years. Bank loan as a percentage of Sales has increased more than double in the year 20X2 when compared to year 20X1 Shareholders equity has declined over the years as a percentage of Total Assets. Cost of goods sold has arisen in terms of Sales in the year 20X2 compared to 20X1. Profit before taxes has decreased as a percentage of Sales in 20X2 but has shown upward movement in 20X3. Same trend is seen in profit after taxes.

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