The following is data in dollars from financial statements

The following is data in dollars from financial statements of an international company called “Suits for every size” which was established in 2010 and whose main activity is the sale of suits to the whole world:

Suits All Sizes

Suits All Sizes

Competing Company

שנתי 2018

שנתי 2019

שנתי 2019

Name

127,800,000

47,963,000

27,253,000

Total balance

76,372,000

5,844,000

3,844,000

Current Assets

51,428,000

42,119,000

23,409,000

Non-current assets

12,220,000

13,410,000

15,610,000

Equity

90,810,000

8,501,000

7,411,000

Current liabilities

24,770,000

26,052,000

4,232,000

Non-current liabilities

gain and loss

13,210,000

11,878,000

9,178,000

Total Revenue

8,651,000

7,221,000

6,883,000

Total cost of sales

4,559,000

4,657,000

2,295,000

Gross profit

4,359,000

4,232,000

1,735,000

Operating Profit

3,221,000

1,961,000

1,201,000

Profit after management and general

2,920,000

(510,000)

520,000

Profit (loss) after financing expenses

2,820,000

1,190,000

520,000

Profit after other income / expenses

2,820,000

1,190,000

520,000

Pure profit

Additional data:

1. The company learned on December 31, 2019 that its large customer abroad who owed it $ 500,000 went into cash flow difficulties and asked to defer payment for an unknown date

During 2019, the company sold a building that it owned and therefore generated a capital gain of $ 1,700,000.

3. The Company stated in its notes to its reports that the issue of depreciation of the Company’s machines (valued at NIS 30 million in the books) is a “critical accounting estimate” and that the Company is not required to reduce in light of the use of a discount rate of 6%. The discount rate used by the competing company to examine impairment of similar assets is 8%.

4. There are covenants (financial criteria) due to the Company’s liabilities to banks in the amount of NIS 30 million, according to which if the equity is less than 26% of the total balance sheet, the banks have the right to repay the debt immediately.

Required:

Based on your data, analyze the changes that took place in the various items in the company’s reports between 2018 and 2019, using financial ratios and comparisons with a competing company.

And formulate a position on the “financial situation” of the company.

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