Deep Roots Distillery Case Solution

1. Explain what the balance sheet, income statement, and cash flow statement reveal about how the company is functioning.

The financial health of a business is critical to its success and prosperity. To ensure sustained growth and profitability, it is essential to carefully manage various financial metrics that impact the organization's performance. One crucial financial metric that can impact a business's performance is its current capital, which refers to the amount of cash and assets readily available to cover day-to-day expenses. A rise in current capital indicates that the business has additional resources that can be quickly converted into revenue, which can help the business cover its expenses more efficiently. Moreover, a higher current capital also lowers the liquidation ratio, as those with commodities can readily meet their monetary obligations while their assets become payable. This means the business can easily meet its financial obligations and avoid liquidity issues. 

On the other hand, a rise in the company's current liabilities can harm its success. If the business cannot fulfil its commitments before they are due, it may face liquidity issues, hindering its operations and overall performance. As a result, current obligations and overall debt amounts should be closely monitored and managed. Sales are another essential financial metric that can impact a business's success. A rise in sales is beneficial to the efficiency and productivity of the organization, as it leads to increased revenue and a positive image of the business in the public eye. This can attract new investors and increase the trust of current ones. However, an increase in supplies may indicate that the business is not selling enough products. In such a scenario, the business should avoid accumulating excessive inventory and maintain the year's remaining shares. 

Otherwise, increased supplies may result in lower sales and income, less storage room, and obsolete products. Therefore, monitoring supply levels and ensuring they align with the current demand is crucial. Lastly, a loss fall is a positive indicator that the business is earning the necessary profits and improving its revenue. This indicates that the organization is efficiently managing its resources, implementing effective cost-cutting measures, and generating revenue. As a result, the business is likely to experience sustained growth and profitability in the long run. Businesses must focus on minimizing their losses by identifying inefficiencies, streamlining processes, and investing in profitable ventures.