Conduct a financial analysis using 4 types of financial ratios for three year period (include numbers for your industry or childr
Conduct a financial analysis using 4 types of financial ratios for three year period (include numbers for your industry or children's nest)?
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STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY
INCOME TAX BASIS
DECEMBER 31, 2019
ASSETS
CURRENT ASSETS Cash $ 395,096 Employee Loan Receivable 3,526 Prepaid Expenses 60,869
Total Current Assets 459,491
PROPERTY AND EQUIPMENT, AT COST
,I Leasehold Improvements 833,848
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Furniture, Fixtures & Toys 210,856 Vehicles 321,029 Equipment 259,482
Total 1,625,215 Less: Accumulated Depreciation (1,292,066)
Net Property and Equipment 333,149
OTHER ASSETS Refundable Deposits 6,847 Non-Compete Agreements 11,944 Goodwill 11,944
Total 30,735 Total Assets $ 823,375
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
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STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY
INCOME TAX BASIS
December 31, 2019
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES Employee Loan Payable
STOCKHOLDER'S EQUITY
Common Stock, $1 Par Value; Authorized 5,000 Shares, Issued and Outstanding 500 Shares
Retained Earnings-Income Tax Basis
Total Stockholder's Equity
Total Liabilities and Stockholders' Equity
$ 2,643 –�–
500 820,232
820,732
$ 823,375
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
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REVENUES
STATEMENT OF REVENUES, EXPENSES AND RETAINED EARNINGS-INCOME TAX BASIS
FOR THE YEAR ENDED December 31, 2019
D ay Care Fees and Programs
EXPENSES (See Schedule)
EXCESS OF REVENUES OVER EXPENSES BEFORE OTHER INCOME
OTHER INCOME
Auto Reimbursements
EXCESS OF REVENUES OVER EXPENSES
RETAINED EARNINGS, BEGINNING OF YEAR – INCOME TAX BASIS
STOCKHOLDER DISTRIBUTIONS
RETAINED EARNINGS, END OF YEAR – INCOME TAX BASIS
$ 4,508,662
$
(3,778,117)
730,545
5,396
735,941
728,403
644,112)
820,232
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
I
EXPENSES
STATEMENT OF REVENUES, E XPENSES AND RETAINED EARNINGS-INCOME TAX BASIS
FOR THE YEAR ENDED December 31, 2019
Accreditation Advertising Bank Charges Children's Activities Conferences Contract Services Depreciation Director's Fees Dues and Subscriptions Fire Safety Gifts Groceries Insurance Lawn Care Legal and Accounting Licenses Loss on Fixed Asset Disposals Maintenance and Repairs Meals Non-Compete Agreement and
Goodwill Amortization Office Expense Payroll Processing Pest Control Postage
Recruitment and Training Rent Salaries-Officers Salaries-Other Supplies Taxes-Other Taxes-Payroll Telephone Utilities Vehicle Expenses
Total Expenses
$ 3,560 2,084
12,341 32,560
1,520 9,036
104,749 30,000
724 8,048 7,246
321,563 237,835
41,355 52,211
3,046 18,965
125,684 1,230
6,667 57,121 10,825
9,081 90
1,904 109,872 308,264
1,841,202 82,372
3,869 169,612
19,805 93,445 50,231
$ 3,778,117
SEE ACCOMPANYING ACOUNTANT'S COMPILATION RE PORT
,
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STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY
INCOME TAX BASIS
DECEMBER 31, 2020
ASSETS
CURRENT ASSETS Cash Employee Loan Receivable Prepaid Expenses Deposits
Total Current Assets
PROPERTY AND EQUIPMENT, AT COST Leasehold Improvements Furniture, Fixtures & Toys Vehicles Equipment
Total Less: Accumulated Depreciation
Net Property and Equipment
OTHER ASSETS
Refundable Deposits Non-Compete Agreements Goodwill
Total
Total Assets
$
$
223,566 2,883
57,477 5,000
288,926
865,507 199,801 321,251 253,108
1,639,667 (1,268,820)
370,847
6,847 8,611 8,611
24,069 683,842
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
. '
STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY
INCOME TAX BASIS
December 31, 2020
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES SBA Loan Payable Payroll Tax Liability Employee Loan Payable
STOCKHOLDER'S EQUITY
Common Stock, $1 Par Value; Authorized 5,000 Shares, Issued and Outstanding 500 Shares
Retained E arnings-Income Tax Basis
Total Stockholder's Equity
Total Liabilities and Stockholders• Equity
$
$
459,475 58,461
5,301 523,237
500 160,105
160,605
683,842
SEE ACCOMPANYING ACCOUNTANT 1 S COMPILATION REPORT
REVENUES
STATEMENT OF REVENUES, EXPENSES AND RETAINED EARNINGS-INCOME TAX BASIS
FOR THE YEAR ENDED December 31, 2020
Day Care Fees and Programs
EXPENSES (See Schedule)
EXCESS OF REVENUES OVER EXPENSES BEFORE OTHER INCOME
OTHER INCOME
Auto Reimbursements
EXCESS OF REVENUES OVER EXPENSES
RETAINED EARNINGS, BEGINNING OF YEAR – INCOME TAX B ASIS
STOCKHOLDER DISTRIBUTIONS
RETAINED EARNINGS, END OF YEAR – INCOME TAX B ASIS
$ 3,849,590
(3,188,019)
$
661,571
4,358
665,929
820,232
(1,326,056)
160,105
SEE ACCOMPANY ING ACCOUNTANT'S COMPILATION REPORT
EXPENSES
STATEMENT OF REVENUES, EXPENSES AND RETAINED EARNINGS-INCOME TAX BASIS FOR THE YEAR ENDED December 31, 2020
Accreditation Advertising Bank Charges Children's Activities Contract Services Depreciation Director's Fees Dues and Subscriptions Fire Safety Gifts Groceries Insurance Lawn Care Legal and Accounting Licenses and Taxes Maintenance and Repairs Meals Non-Compete Agreement and
Goodwill Amortization Office Expense Payroll Processing Pest Control Recruitment and Training Rent Salaries-Officers Salaries-Other Supplies Taxes-Payroll Telephone Utilities Vehicle Expenses
Total Expenses
$ 2,215. 937
7,660 19,605
5,353 46,087 30,000
268 8,118 3,850
243,078 230,801
23,015 18,284
4,458 147,154
793
6,667 68,425 11,986
6,675 1,020
109,872 279,389
1,592,512 44,811
140,189 17,347 86,740 30,710
$ 3,188,019
SEE ACCOMPANYING ACOUNTANT'S COMPILATION REPORT
,
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I I'
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STATEMENT OF ASSETS, LIABILITIES AND S TOCKHOLDER'S EQUITY
INCOME TAX BASIS
DECEMBER 31, 2018
CURRENT ASSETS Cash
ASSETS
Employee Loan Receivable Prepaid Expenses
Total Current Assets
PROPER TY AND EQUIPMENT, AT COS T Leasehold Improvements Furniture, Fixtures & Toys Vehicles Equipment
Total Less: Accumulated Depreciation
Net Property and Equipment
OTHER ASSETS Refundable Deposits Non-Compete Agreements Goodwill
Total
Total Assets
$ 325,834 810
55,056 381,700
754,004 207,055 356,510 246,978
1,564,547 (1,254,428)
310,119
6,846 15,278 15,278 37,402
$ 729,221
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY
INCOME TAX BASIS
December 31, 2018
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES Employee Loan Payable
STOCKHOLDER'S EQUITY
Common Stock, $1 Par Value; Authorized 5,000 Shares, Issued and Outstanding 500 Shares
Retained Earnings-Income Tax Basis
Total Stockholder's Equity
Total Liabilities and Stockholders' Equity
$ 318
500 728,403
728,903
$ 729,221
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
I
REVENUES
STATEMENT OF REVENUES, EXPENSES AND RETAINED EARNINGS-INCOME TAX BASIS
FOR THE YEAR ENDED December 31, 2018
Day Care Fees and Programs
EXPENSES (See Schedule)
EXCESS OF REVENUES OVER EXPENSES BEFORE OTHER INCOME
OTHER INCOME
Auto Reimbursements
EXCESS OF REVENUES OVER EXPENSES
RETAINED EARNINGS, BEGINNING OF YEAR – INCOME TAX BASIS
STOCKHOLDER DISTRIBUTIONS
$ 4,471,223
(3,769,929)
701,294
5,301
706,595
664,831
643,023)
RETAINED EARNINGS, EN D OF YEAR – INCOME TAX BASIS $ 728,403
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
EXPENSES
STATEMENT OF REVENUES, EXPENSES AND RETAINED EARNINGS-INCOME TAX BASIS
FOR THE YEAR ENDED December 31, 2018
Accreditation Advertising Bank Charges Children's Activities Conferences Contract Services Depreciation Director's Fees Dues and Subscriptions Employee Lease Expense Fire Safety Gifts Groceries Insurance Lawn Care Legal and Accounting Licenses Loss on Fixed Asset Disposals Maintenance and Repairs Meals Non-Compete Agreement and
Goodwill Amortization Office Expense Payroll Processing Pest Control Postage Recruitment and Training Rent Salaries-Officers Salaries-Other Supplies Taxes Taxes-Payroll Telephone Utilities Vehicle Expenses
Total Expenses
$ 3,620 3,188 7,938
32,754 3,925 8,381
129,474 30,000
441 793,053
12,490 3,287
288,390 149,776
41,565 16,890
3,269 121
110,784 3,026
6,667 50,015
6,371 11,658
83 1,324
108,720 308,000
1,279,652 65,072
924 124,097
15,833 94,576 54,565
$3,769,929
SEE ACCOMPANYING ACOUNTANT'S COMPILATION REPORT
,
Financial Assessment
Throughout this analysis, we will use Microsoft as a proxy for the SaaS industry, while still recognizing the difference in company size, market share, and life-cycle stage. In addition, we will also reference Black Knight, although not a SaaS industry leader, serves as a good alternative for Appraisal Vision. However, we recognize that Black Knight is a company much further in the life cycle than Appraisal Vision. Black Knight in 2020 posted a profit of $230 million and revenue of $1.197 billion. While Appraisal Vision has posted losses. Both Microsoft and Black Knight will help put the financial ratios in perspective.
AppraisalVision posted an 87.7% growth in revenue year over year in 2020. Meanwhile, their total expenses increased by 54.5%. This shows that even though their losses were bigger in 2020 than in 2019 their revenues are growing at a faster rate than their expenses; if this trend continues, they will be able to post profits. Their total expenses as a percent of their revenue decreased by 17.7%.
To better understand these big picture statistics, we needed to also determine their key drivers. One of the things that contributed to both their increase in revenue and expenses is the great increase in their marketing spending. From 2019 to 2020, marketing expenses increased by 3,288.2%. An investment that most likely led to an increase in clients and subsequently helped grow AppraisalVision’s revenue. Additionally, their depreciation and amortization decreased by 98% in 2020 which played a big role in limiting their expenses. Another notable increase is their payroll and administrative expenses- both increased by more than 100%. This increase means they had more employees which would then allow them to have the ability to scale up their operations to match a growing network. This was especially crucial when the markets saw a surprise increase in demand throughout 2020 as a result of the drop in interest rates.
The company has very good liquidity with a cash ratio of 2.9 and a current ratio of 3.29. The cash ratio means that they have 2.9 times as much cash and cash equivalents as they do total current liabilities. This means that in event that all their current liabilities come to collect now, AppraisalVision would be able to cover them 2.9 times over just with their cash and 3.29 times over if we include all their current assets. Current assets mean assets that can be liquidated within a year. This setup of their financials is in line with tech-industry standards. Most, if not all tech companies have current ratios over 1.0. For example, Microsoft has a cash ratio of 1.89 and a current ratio of 2.52 (Yahoo Finance, 2021). Back Knight also has a cash ratio of 0.12 and a current ratio of 0.99 (Yahoo Finance, 2021).
AppraisalVision’s return on equity is still negative because they still have yet to make a profit. However, their enterprise value (EV) grew by 54.6% year over year in 2020. Enterprise value is calculated as the value of equity plus debt minus cash. It is the net value of a firm if one were to buy it. Their EV to revenue in 2020 was 0.4x. This means that for every dollar in EV they make 40 cents of revenue. This is very low but acceptable for a very young company still entering its growth phase. Growth in revenue could help their enterprise value. They posted an impressive gross margin of 89.2%; for comparison, Microsoft has a gross profit margin of 68.3% (Yahoo Finance, 2021). Black Knight also has an operating margin of 25.6% (Yahoo Finance, 2021). As AppraisalVision grows and takes advantage of economies of scale, and spreads their overhead over a larger amount of unit sales they will be able to make a larger profit.
AppraisalVision’s debt-to-equity ratio is 0.17 and their debt-to-capital is 0.15. To put this in perspective Microsoft has a debt-to-equity ratio of 0.6 and a debt-to-capital ratio of 0.38 (Yahoo Finance, 2021). Black Knight’s debt-to-equity ratio is 0.808 and their debt-to-capital is 0.44 (Yahoo Finance, 2021). These two ratios show the capital structure of the company and how much of it is financed through debt. The debt portion of AppraisalVision’s capital is very small which lowers their credit risk. This makes the company safer to invest in as they have a lower probability of defaulting on their liabilities, that is especially with their high liquidity. However, this could also mean that there is an opportunity for them to grow through debt, but they are not taking advantage of it; this could be a bad signal to investors. This could result from a lack of access to debt or a belief that they will be unable to repay it.
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