Financial talk

Marty Monk Fisher owns the largest motorcycle dealership in Southern Ohio. Recently, he was approached by Bob Sherman, founder of Mandrake Motorcycles, and offered the opportunity to be the sole distributor of Mandrake cycles in the state.Acceptance of the offer will require Monk to open a dedicated Mandrake showroom and repair facility and obviously stock Mandrake cycles and parts. Monk is quite impressed by the Mandrake product but before making a major investment he wants to be confident that the company will be around for the long haul. Accordingly he has asked you to analyze the audited financial statements of Mandrake for the previous two years. a.) Prepare a horizontal and vertical analysis of the 2009 and 2008 financial statements. b.) Calculate the following ratios for 2009 and 2008: return on assets; gross margin percentage, receivables turnover, days' sales in receivables; inventory turnover; days' sales in inventory; debt to equity; and times interest earned. c.)Based on your analysis in parts (a) and (b), comment on any matters that Monk should probe in an upcoming meeting with Bob Sherman from Mandrake. d.) Based on the limited information available, do you think Monk should open a Mandrake showroom?

Marty Monk Fisher owns the largest motorcycle dealership in Southern Ohio. Recently, he was approached by Bob Sherman, founder of Mandrake Motorcycles, and offered the opportunity to be the sole distributor of Mandrake cycles in the state.Acceptance of the offer will require Monk to open a dedicated Mandrake showroom and repair facility and obviously stock Mandrake cycles and parts. Monk is quite impressed by the Mandrake product but before making a major investment he wants to be confident that the company will be around for the long haul. Accordingly he has asked you to analyze the audited financial statements of Mandrake for the previous two years. a.) Prepare a horizontal and vertical analysis of the 2009 and 2008 financial statements. b.) Calculate the following ratios for 2009 and 2008: return on assets; gross margin percentage, receivables turnover, days' sales in receivables; inventory turnover; days' sales in inventory; debt to equity; and times interest earned. c.)Based on your analysis in parts (a) and (b), comment on any matters that Monk should probe in an upcoming meeting with Bob Sherman from Mandrake. d.) Based on the limited information available, do you think Monk should open a Mandrake showroom?