Our Financials

Balance Sheet Analysis

Assets:

• 2025 Forecasted Total Assets: $875,000
• 2024 Actual Total Assets: $720,000
• Growth in Assets: $155,000 (or 21.5%)

Liabilities:

• 2025 Forecasted Total Liabilities: $575,000
• 2024 Actual Total Liabilities: $510,000
• Growth in Liabilities: $65,000 (or 12.7%)

Equity:

• 2025 Forecasted Total Equity: $300,000
• 2024 Actual Total Equity: $210,000
• Growth in Equity: $90,000 (or 42.9%)

Income Statement Analysis

Revenue:

• 2025 Forecasted Total Revenue: $1,003,564
• 2024 Actual Total Revenue: $872,664
• Growth in Revenue: $130,900 (or 15%)

Cost of Goods Sold (COGS):

• 2025 Forecasted COGS: $390,000
• 2024 Actual COGS: $339,065.60
• Growth in COGS: $50,934.40 (or 15%)

Gross Profit:

• 2025 Forecasted Gross Profit: $613,564
• 2024 Actual Gross Profit: $533,598.40
• Growth in Gross Profit: $79,965.60 (or 15%)

Operating Income:

• 2025 Forecasted Operating Income: $28,564
• 2024 Actual Operating Income: ($38,754)
• Improvement in Operating Income: $67,318

Net Income:

• 2025 Forecasted Net Income: $2,564
• 2024 Actual Net Income: ($62,480.64)
• Improvement in Net Income: $65,044.64

Amortization and Net Book Value Analysis

Accumulated Amortization:

• 2025 Forecasted Accumulated Amortization: $38,300
• 2024 Actual Accumulated Amortization: $35,800
• Increase in Amortization: $2,500

Net Book Value:

• 2025 Forecasted Net Book Value: $361,700
• 2024 Actual Net Book Value: $342,200
• Increase in Net Book Value: $19,500

Key Financial Ratios

1. Debt-to-Asset Ratio

The debt-to-asset ratio measures the proportion of a company's assets that are financed by debt. It is calculated as follows:

$\text{Debt-to-Asset Ratio} = \frac{\text{Total Liabilities}}{\text{Total Assets}}$

For 2024:

• Total Liabilities: $610,000
• Total Assets: $850,000

$\text{Debt-to-Asset Ratio (2024)} = \frac{610,000}{850,000} \approx 0.718$

For 2025 (Forecasted):

• Total Liabilities: $575,000
• Total Assets: $875,000

$\text{Debt-to-Asset Ratio (2025)} = \frac{575,000}{875,000} \approx 0.657$

2. Debt-to-Equity Ratio

The debt-to-equity ratio indicates the relative proportion of debt and equity used to finance a company's assets. It is calculated as follows:

$\text{Debt-to-Equity Ratio} = \frac{\text{Total Liabilities}}{\text{Total Shareholders' Equity}}$

For 2024:

• Total Liabilities: $610,000
• Total Shareholders' Equity: $240,000

$\text{Debt-to-Equity Ratio (2024)} = \frac{610,000}{240,000} \approx 2.542$

For 2025 (Forecasted):

• Total Liabilities: $575,000
• Total Shareholders' Equity: $300,000

$\text{Debt-to-Equity Ratio (2025)} = \frac{575,000}{300,000} \approx 1.917$

3. Quick Ratio (Acid Test Ratio)

The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. It is calculated as follows:

$\text{Quick Ratio} = \frac{\text{Current Assets} - \text{Inventory}}{\text{Current Liabilities}}$

For 2024:

• Current Assets: $435,000
• Inventory: $40,000
• Current Liabilities: $135,000

$\text{Quick Ratio (2024)} = \frac{435,000 - 40,000}{135,000} \approx 2.926$

For 2025 (Forecasted):

• Current Assets: $575,000
• Inventory: $50,000
• Current Liabilities: $175,000

$\text{Quick Ratio (2025)} = \frac{575,000 - 50,000}{175,000} \approx 3.000$

4. Current Ratio (Working Capital Ratio)

The current ratio measures a company’s ability to pay off its short-term liabilities with its short-term assets. It is calculated as follows:

$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$

For 2024:

• Current Assets: $435,000
• Current Liabilities: $135,000

$\text{Current Ratio (2024)} = \frac{435,000}{135,000} \approx 3.222$

For 2025 (Forecasted):

• Current Assets: $575,000
• Current Liabilities: $175,000

$\text{Current Ratio (2025)} = \frac{575,000}{175,000} \approx 3.286$

5. Net Profit Margin

The net profit margin measures how much net income is generated as a percentage of revenues. It is calculated as follows:

$\text{Net Profit Margin} = \frac{\text{Net Income}}{\text{Total Revenue}} \times 100$

For 2024:

• Net Income: ($62,480.64)
• Total Revenue: $872,664

$\text{Net Profit Margin (2024)} = \frac{-62,480.64}{872,664} \times 100 \approx -7.16\%$

For 2025 (Forecasted):

• Net Income: $2,564
• Total Revenue: $1,003,564

$\text{Net Profit Margin (2025)} = \frac{2,564}{1,003,564} \times 100 \approx 0.26\%$

6. Return on Investment (ROI)

The return on investment measures the gain or loss generated on an investment relative to the amount of money invested. It is calculated as follows:

$\text{ROI} = \frac{\text{Net Income}}{\text{Total Investment}} \times 100$

For this calculation, assuming the total investment is represented by total assets:

For 2024:

• Net Income: ($62,480.64)
• Total Investment (Total Assets): $850,000

$\text{ROI (2024)} = \frac{-62,480.64}{850,000} \times 100 \approx -7.35\%$

For 2025 (Forecasted):

• Net Income: $2,564
• Total Investment (Total Assets): $875,000

$\text{ROI (2025)} = \frac{2,564}{875,000} \times 100 \approx 0.29\%$

7. Return on Shareholders' Equity

The return on shareholders' equity measures a company’s profitability by revealing how much profit a company generates with the money shareholders have invested. It is calculated as follows:

$\text{Return on Equity} = \frac{\text{Net Income}}{\text{Total Shareholders' Equity}} \times 100$

For 2024:

• Net Income: ($62,480.64)
• Total Shareholders' Equity: $240,000

$\text{Return on Equity (2024)} = \frac{-62,480.64}{240,000} \times 100 \approx -26.03\%$

For 2025 (Forecasted):

• Net Income: $2,564
• Total Shareholders' Equity: $300,000

$\text{Return on Equity (2025)} = \frac{2,564}{300,000} \times 100 \approx 0.85\%$

Conclusion

The company shows substantial improvement in revenue, net income, and equity. The current and debt-to-equity ratios indicate strong liquidity and improved financial health. The projected increase in assets and equity further supports the potential for growth.

Given these improvements and the company's ability to generate positive net income in the forecasted year, it appears to be a worthy investment opportunity. However, it's essential to consider industry-specific factors, market conditions, and conduct further due diligence before making a final investment decision.

For the Fiscal Years Ending May 31, 2024 and 2025

For the Fiscal Years Ending May 31, 2024 and 2025

For the Fiscal Years Ending May 31, 2024 and 2025

Statement of Changes in Net Assets

For the Fiscal Years Ending May 31, 2024 and 2025

2024

Category	Amount ($)
Beginning Net Assets (June 1, 2023)	$300,000
Changes during the year
Net Income (Loss)	($62,480.64)
Other Comprehensive Income	$0
Total Comprehensive Income (Loss)	($62,480.64)
Ending Net Assets (May 31, 2024)	$237,519.36

2025 (Forecasted)

Category	Amount ($)
Beginning Net Assets (June 1, 2024)	$237,519.36
Changes during the year
Net Income (Loss)	$2,564.00
Other Comprehensive Income	$0
Total Comprehensive Income (Loss)	$2,564.00
Ending Net Assets (May 31, 2025)	$240,083.36

Notes to the Statement of Changes in Net Assets

1. Beginning Net Assets: Represents the net assets at the start of the fiscal year.
2. Net Income (Loss): Reflects the net income or loss for the fiscal year as per the Income Statement.
3. Other Comprehensive Income: Represents other items of comprehensive income (such as unrealized gains and losses) not included in net income. For these fiscal years, there are no items of other comprehensive income.
4. Ending Net Assets: Represents the net assets at the end of the fiscal year, calculated as the sum of beginning net assets and total comprehensive income (loss). 

Cash Flow Statement

For the Fiscal Years Ending May 31, 2024 and 2025

2024

Category	Amount ($)
Cash Flows from Operating Activities
Net Income (Loss)	($62,480.64)
Adjustments for:
Depreciation and Amortization	$35,800
Changes in Working Capital:
Accounts Receivable	($25,000)
Inventory	($10,000)
Prepaid Expenses	($5,000)
Accounts Payable	$20,000
Accrued Liabilities	$5,000
Net Cash Provided by Operating Activities	($41,680.64)

Table 1: Cash Flows from Investing Activities

Category	Amount ($)
Cash Flows from Investing Activities
Purchase of Property, Plant, and Equipment	($50,000)
Net Cash Used in Investing Activities	($50,000)

Table 2: Cash Flows from Financing Activities

Category	Amount ($)
Cash Flows from Financing Activities
Proceeds from Short-Term Debt	$20,000
Repayment of Long-Term Debt	($10,000)
Net Cash Provided by Financing Activities	$10,000

Table 3: Net Increase (Decrease) in Cash

Category	Amount ($)
Net Increase (Decrease) in Cash	($81,680.64)
Cash at Beginning of Year	$381,680.64
Cash at End of Year	$300,000

 

 

2025 (Forecasted)

Category	Amount ($)
Cash Flows from Operating Activities
Net Income (Loss)	$2,564
Adjustments for:
Depreciation and Amortization	$38,300
Changes in Working Capital:
Accounts Receivable	($25,000)
Inventory	($10,000)
Prepaid Expenses	($5,000)
Accounts Payable	$25,000
Accrued Liabilities	$5,000
Net Cash Provided by Operating Activities	$30,864

Table 1: Cash Flows from Investing Activities

Category	Amount ($)
Cash Flows from Investing Activities
Purchase of Property, Plant, and Equipment	($50,000)
Net Cash Used in Investing Activities	($50,000)

Table 2: Cash Flows from Financing Activities

Category	Amount ($)
Cash Flows from Financing Activities
Proceeds from Short-Term Debt	$10,000
Repayment of Long-Term Debt	($10,000)
Net Cash Provided by Financing Activities	$0

Table 3: Net Increase (Decrease) in Cash

Category	Amount ($)
Net Increase (Decrease) in Cash	($19,136)
Cash at Beginning of Year	$300,000
Cash at End of Year	$280,864

 Notes to the Cash Flow Statement

1. Operating Activities: Reflects the cash inflows and outflows from the company's core business operations.
2. Investing Activities: Represents the purchase and sale of long-term investments and property, plant, and equipment.
3. Financing Activities: Involves the cash inflows and outflows from borrowing and repaying debt, and other financial activities.
4. Net Cash Increase (Decrease): The overall change in the company's cash position for the fiscal year.
5. Cash at Beginning and End of Year: The cash position at the start and end of the fiscal year, respectively. 

For the Fiscal Years Ending May 31, 2024 and May 31, 2025