Case : Darlarna Furniture

Company Analysis

When Mr. Blix got his 2018 financial statements back from the accountant in mid-January, 2019, he became quite concerned about the dramatic drop in profits as he knew the venture capitalists were looking to sell their investment soon.

He was also alarmed by reports in the media that a number of investment firms in the U.S. had failed and required government bailouts to continue operating.

Could a severe recession be soon to follow? How would this influence demand for his products?

Would the Bank of Montreal still be prepared to provide needed financing?

In response to these concerns, Mr. Blix retained Sally Delaney, CPA to conduct an analysis of Darlarna's operations and to make recommendations for future action within the week.

Case : Darlarna Furniture

Student Instructions

1. Prepare the following financial exhibits for 2016, 2017, and 2018:

• Ratio table with industry averages

• Vertical analysis of income statements and balance sheets

• Horizontal analysis (index numbers) of income statements and balance sheets

• 5-part analysis of ROE

• Cash flow statements (2017 and 2018 only)

Note: All ratios should be calculated using year-end figures - yearly averages should not be used.

2. Prepare a 2-page memorandum as requested by Mr. Blix. The memo should be divided into sections describing liquidity, asset management, long-term debt ability, profitability, and recommendations.

Attachment:- Case-Darlarna Furniture.rar