Question.3062 - Income Statement 2008 & 2007 1/1/2008-12/31/2008Revenue $3,249,580.53 Direct Expenses Salaries & Wages $487,437.08 Vehicle Maintenance $64,991.61 Fuel $20,449.80 Traps & Chemicals $1,378,203.63 $1,951,082.12 Indirect Expenses Rent $39,338.17 Licenses $2,480.00 Insurance $103,613.43 Administrative Salaries $150,250.00 Commissions $16,991.61 Payroll Taxes $72,014.66 Legal Expenses $12,000.00 Accounting Fees $7,000.00 Office Supplies $7,800.00 Utilities $10,806.40 Advertising Expenses $116,000.00 Bad Debts $122,138.64 Depreciation Expense $94,925.75 Misc. Expense $50,000.00 $805,358.66 Total Expenses $2,756,440.78 Net Income $493,139.751/1/2007-12/31/2007Revenue $3,893,027.78 Direct Expenses Salaries& Wages $583,954.17 Traps & Chemicals $1,651,100.81 Fuel $19,177.32 Vehicle Maintenance $77,860.56 $2,332,092.85 Indirect Expenses Rent $38,192.40 Licenses $2,480.00 Interest Expense $0.00 Insurance $103,613.43 Admin. Salaries $133,500.00 Commissions $52,860.49 Payroll Taxes $84,734.61 Legal Expenses $12,000.00 Accounting Fees $7,000.00 Office Supplies $7,800.00 Utilities $9,824.00 Advertising Expenses $81,510.00 Bad Debts $103,493.45 Depreciation Expense $94,925.75 Misc. Expenses $60,000.00 $791,934.13 $3,124,026.98 Net Income $769,000.80Balance Sheet 2008 & 2007 12/31/2008Current Assets Cash $818,440.68 Accounts Receivable $812,395.13 Inventory $205,934.30 Total Current Assets $1,836,770.12 Fixed Assets Vehicles $268,750.00 Tools $110,953.00 Less Accumulated Depreciation ($284,431.95) Total Fixed Assets $95,271.05 Total Assets $1,932,041.17 Liabilities Current Liabilities Accrued Payroll Taxes $36,007.33 Accounts Payable $270,798.38 Total Current Liabilities $306,805.71 Long-Term Liabilities $0.00 Total Liabilities $306,805.71 Stockholders’ Equity Common Stock (1,000,000 authorized shares at $1 par) $70,000.00 Retained Earnings $1,062,095.71 Net Income $493,139.75 Total Stockholders’ Equity $1,625,235.46 Total Liabilities & Stockholders’ Equity $1,932,041.1712/31/2007Current Assets Cash $291,703.44 Accounts Receivable $811,047.45 Inventory $205,934.30 Total Current Assets $1,308,685.20 Fixed Assets Vehicles $268,750.00 Tools $110,953.00 Less Accumulated Depreciation ($189,506.20) Total Fixed Assets $190,196.80 Total Assets $1,498,882.00Liabilities Current Liabilities Accrued Payroll Taxes $42,367.31 Accounts Payable $324,418.98 Total Current Liabilities $366,786.29 Long?Term Liabilities Auto Loans $0.00 Total Long?Term Liabilities $0.00 Total Liabilities $366,786.29 Stockholders’ Equity Common Stock (1,000,000 authorized shares at $1 par) $70,000.00 Retained Earnings $293,094.91 Net Income $769,000.80 Total Stockholders’ Equity $1,132,095.71 Total Liabilities & Stockholders’ Equity $1,498,882.00Instructions: Using the 2007 & 2008 Income Statement and Balance Sheet provided, calculate the following… Liquidity ratios ? Current ratio ? Acid-test, or quick, ratio ? Receivables turnover ? Inventory turnover Profitability ratios ? Asset turnover ? Profit margin ? Return on assets ? Return on common stockholders’ equity Solvency ratios ? Debt to total assets ? Times interest earned Please be sure to also do the following… 1. Show your calculations for each ratio 2. Create a horizontal and vertical analysis for the balance sheet and the income statement 3. Write a 350- to 700-word memo to the CEO of your selected organization (Berry’s Bug Busters) in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions: a) What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company? b) Which users may be interested in each type of ratio? c) What does the collected data reveal about eh performance and position of the company
Answer Below:
Ans xxxxxxxxx ratio xxxxxxx ratio xxxxxxx assets xxxxxxx liabilities xxxxxxx ratio xxxxxxx ratio xxxxx ratio xxxxxxx Assets x Inventories xxxxxxx Liabilities xxxxx ratio x Quick xxxxx - xxxxxxxxxxx turnover xxx Credit xxxxx Average xxxxxxxx Receivables xxxxxxxxxxx turnover xxxxxxxxxxx turnover xxxxxxxxx Turnover xxxx of xxxxx Sold xxxxxxx Inventory xxxxxxxxx Turnover xxxxxxxxx Turnover xxxxxxxxxxxxx ratios xxxxx turnover xxx Sales xxxxxxx Total xxxxxx Asset xxxxxxxx Asset xxxxxxxx Gross xxxxxx margin xxxxxxx COGS xxxxxxx Gross xxxxxx margin x Gross xxxxxx margin x Return xx asset xxxxxx Net xxxxxx Average xxxxx Asset xxxxxx on xxxxx Return xx asset xxxxxx on xxxxxx stockholders xxxxxx Annual xxx Income xxxxxxx Stockholders xxxxxx Return xx common xxxxxxxxxxxx equity xxxxxx on xxxxxx stockholders xxxxxx Solvency xxxxxx Debt xx total xxxxx Short xxxx debt xxxx term xxxx Total xxxxx Debt xx total xxxxx Debt xx total xxxxx Times xxxxxxxx Earned xxxxxxxx before xxxxxxxx and xxx Interest xxxxxxx Times xxxxxxxx Earned xx as xx interest xxxx Times xxxxxxxx Earned xx as xx interest xxxxxxxxxxxx analysis xxxxxxxxxxxxxxxx Current xxxxxx Cash xxxxxxxx Receivable xxxxxxxxx Total xxxxxxx Assets xxxxx Assets xxxxxxxx Tools xxxx Accumulated xxxxxxxxxxxx - x Total xxxxx Assets x Total xxxxxx Liabilities xxxxxxx Liabilities xxxxxxx Payroll xxxxx - xxxxxxxx Payable x Total xxxxxxx Liabilities x Long-Term xxxxxxxxxxx DIV xxx Total xxxxxxxxxxx - xxxxxxxxxxxx Equity xxxxxx Stock xxxxxxxxxx shares xx par xxxxxxxx Earnings xxx Income x Total xxxxxxxxxxxx Equity xxxxx Liabilities xxx Stockholders xxxxxx Balance xxxxx Horizontal xxxxxxxxxxxxxxxx analysis xxxxxxxxxxxxxxxx Revenue x Direct xxxxxxxx Salaries xxx Wages x Vehicle xxxxxxxxxxx - xxxx Traps xxx Chemicals x Indirect xxxxxxxx Rent xxxxxxxx Interest xxxxxxx DIV xxxxxxxxx Administrative xxxxxxxx Commissions x Payroll xxxxx - xxxxx Expenses xxxxxxxxxx Fees xxxxxx Supplies xxxxxxxxx Advertising xxxxxxxx Bad xxxxx Depreciation xxxxxxx Misc xxxxxxx - xxxxx Expenses x Net xxxxxx Horizontal xxxxxxxx Income xxxxxxxxxxxx We xxx see xxxx the xxxxxxx Ratio xxx increased xxxx to xxxx year xx year xxx a xxxx Current xxxxx suggests xxxx though xxx company xx in x good xxxxxxxx to xxx off xxx debts xxx it xx also xxx as x high xxxxxxx ratio xxxx shows xxxx lot xx money xx invested xx the xxxxxxx Assets xxxxx could xxxx been xxxxxxxxxxx among xxxxxxxxxxxx as xxxxxxxxx An xxxx test xxxxx or xxxxx ratio xx over xx good xxxx the xxxxxxxx is xxxxxxxxxxx to xx able xx pay xxx debts xxxx if xx cannot xxxx inventories xxxx cash xxxx we xxx say xxxx the xx we xx an xxxxxxxx on xxx basis xx Quick xxxxx the xxxxxxx looks xx a xxxxxxxxxx position xxxx the xxxxx has xxxxxxxx from xx Thus xxxxxxx is xx a xxxxxx position xxxxxxxx receivable xxxxxxxx measures xxx efficiency xx a xxxxxxxx in xxxxxxxxxx its xxxxxx sales xxxxxxxxx a xxxx value xx accounts xxxxxxxxxx turnover xx favorable xxx lower xxxxxx may xxxxxxxx inefficiency xx collecting xxxxxxxxxxx sales xxxxxxxx in xxxxxxxx receivable xxxxxxxx overtime xxxxxxxxx indicates xxxxxxxxxxx in xxx process xx cash xxxxxxxxxx on xxxxxx sales xxx Accounts xxxxxxxxxx turnover xxxxx shows x decline xxxx to xxxx it xxx be xxxxxxx that xxx company xxx gone xxxxxxx on xxx creditors xxxxxxxxx turnover xxxxx is xxxx to xxxxxxx the xxxxxxxxx management xxxxxxxxxx of x business xx general x higher xxxxx of xxxxxxxxx turnover xxxxxxxxx better xxxxxxxxxxx and xxxxx value xxxxx inefficiency xx controlling xxxxxxxxx levels x lower xxxxxxxxx turnover xxxxx may xx an xxxxxxxxxx of xxxxxxxxxxxxx which xxx pose xxxx of xxxxxxxxxxxx and xxxxxxxxx inventory xxxxxxx costs xxxxxxx a xxxx high xxxxx of xxxx ratio xxx be xxxxxxxxxxx by xxxx of xxxxx due xx inventory xxxxxxxx The xxxxxxxxx Turnover xxxxx is xxxxxxx from xx and xxxx shows xxxxxxxxxxxx in xxx Inventory xxxxxx If x company xxx generate xxxx sales xxxx fewer xxxxxx it xxx a xxxxxx turnover xxxxx which xxxxx it xx a xxxx company xxxxxxx it xx using xxx assets xxxxxxxxxxx A xxxxx turnover xxxxx tells xxxx the xxxxxxx is xxx using xxx assets xxxxxxxxx Total xxxxx turnover xxxxx is x key xxxxxx of xxxxxx on xxxxxx as xxxxxxxxx in xxx DuPont xxxxxxxx In xxxx case xxxxxxx and xxx Asset xxxxxxxx Ratio xxx fallen xxxxxxxxxxx which xxxxx poor xxxxxxxxxxx of xxxxxx There xx a xxxx slight xxxxxx in xxxxxx margin xxxx to xxxxxx the xxxxxx has xxxxxx with x very xxxxx percentage xxx falling xxxxxx means xxxxxxxx in xxxx incurred xx the xxxxxxx Thus xxxxxxxxx profit xxxxxx is xxxxxxxx for xxx company xxxxxx on xxxxxx indicates xxx number xx cents xxxxxx on xxxx dollar xx assets xxxx higher xxxxxx of xxxxxx on xxxxxx show xxxx business xx more xxxxxxxxxx Thus xx this xxxx we xxx see xxx Return xx Assets xxx increased xxxx which xx favourable xxx the xxxxxxx Return xx common xxxxxxxxxxxx equity xxxxx measures xxx success xx a xxxxxxx in xxxxxxxxxx income xxx the xxxxxxx of xxxxxx stockholders xxxx in xxxx case xx observe xxxx return xx Equity xxx increased xxxxx is x good xxxx for xxxxxxx as xx will xxxx more xxxxxxxxx Debt xxxxx ranges xxxx to xxxxx value xx debt xxxxx is xxxxxxxxx and x higher xxxxx indicates xxxx higher xxxxxxx of xxxxxxx s xxxxxx are xxxxxxx by xxx creditors xxxxx means xxxxxx risk xx operation xxxxx the xxxxxxxx would xxxx it xxxxxxxxx to xxxxxx loans xxx new xxxxxxxx In xxxx case xxx ratio xx both xxx years xxxxxxx the xxxx Liquidity xxxxxx are xxx ratios xxxx measure xxx ability xx a xxxxxxx to xxxx its xxxxx term xxxx obligations xxxxx ratios xxxxxxx the xxxxxxx of x company xx pay xxx its xxxxxxxxxx liabilities xxxx they xxxx due xxxxxxxxx Ratio xx gauged xx both xxxxxxxx and xxxxxxxx people xxx managers xxx creditors xxx these xxxxxx to xxxxx the xxxxxxx s xxxxxxx to xxxx its xxxxx term xxxxxxxxx Profitability xxxxx is xxxx importantly xxxxx outside xxx firm xxxxx who xxxxxx money xxxx to xxxx a xxxxx whether xxx money xx being xxxxxxxxx to xxx them xxxxxxxxxx returns xxxxxxxx ratios xxx used xx financial xxxxxxxxxxxx that xxxxxx debt xx business xxxxx They xxx interested xx knowing xxx firms xxxxxxxx to xxxxxxx the xxxxx they xxxx taken xxx data xxxxxxxxx shows xxxx the xxxxxxx is xx good xxxxx and xxxxxxxxxxx is xx average xxxxxx in xxx places xxx performance xxx declined xxx the xxxx can xx improved xx working xxxx efficiently xxxxxx Statement xxxxxxxxxx analysis xxxxxxxx analysis xxxxxx Percentage xxxxxxx Revenue x Direct xxxxxxxx Direct xxxxxxxx Salaries xxxxx Salaries xxxxx - xxxxxxx Maintenance xxxxx Chemicals x Fuel xxxx Traps xxxxxxxxx Vehicle xxxxxxxxxxx - xxxxxxxx Expenses xxxxxxxx Expenses xxxx Rent xxxxxxxx Licenses xxxxxxxx Expense xxxxxxxx Expense xxx Insurance xxxxxxxxx Administrative xxxxxxxx Admin xxxxxxxx Commissions xxxxxxxxxxx - xxxxxxx Taxes xxxxxxx Taxes x Legal xxxxxxxx Legal xxxxxxxx Accounting xxxx Accounting xxxx Office xxxxxxxx Office xxxxxxxx Utilities xxxxxxxxx Advertising xxxxxxxx Advertising xxxxxxxx Bad xxxxx Bad xxxxx Depreciation xxxxxxx Depreciation xxxxxxx Misc xxxxxxx Misc xxxxxxxx - xxxxx Expenses xxxxx Expenses x Net xxxxxx Net xxxxxxMore Articles From Accounting
.ico)
.ico)
.ico)
.ico)
