Financial Accounting
1.
a) Net Income = 135,750$
b) OCF = 155,000$
2.
a) Equity Value = Net fixed assets – long-term liabilities
2006: $3600
2007: $3240
b) Net working capital = (current asset– current liabilities year 1)
Change = (CA-CL of years 1) – (CA-CL of year 2) = 972-727 = 245
3.
Common Size Income Statement:
Sales/Revenue = 100%
Cost of Goods Sold = 65.3%
Depreciation = 13%
Earnings before interest and taxes = 21.64%
Interest Paid = 16.32%
Taxable income = 53.25%
Taxes (34%) = 1.8%
Net income = 3.5%
Dividends =
Additonal Retained earnings =
Common Size Balance Statement 2006:
ASSETS
Cash = 2%
Accounts receivable = 3.73%
Inventory = 7.1%
Total Current Assets = 12.83%
Net Plant and Equipment = 87.19%
Total Net Assets = 100%
LIABILITIES
Accounts payable = 2%
Notes payable = 23.55%
Total = 25.55%
Long term debt = 30%
Common stock = 5%
Retained earnings = 39.29%
Total = 44.29%
Total liabilities = 100%
2007:
ASSETS
Cash = 2%
Accounts receivable = 3.73%
Inventory = 7.1%
Total Current Assets = 12.83%
Net Plant and Equipment = 87.19%
Total Net Assets = 100%
LIABILITIES
Accounts payable = 2.4%
Notes payable = 17.31%
Total = 19.71%
Long term debt = 34.60%
Common stock = 5%
Retained earnings = 40.7%
Total = 45.68%
Total liabilities = 100%
4. 2007
Current ratio = current assets / current liabilities = 54.77%
Quick ratio = cash ratio = (Current Assets - Inventories)/Current Liabilities = 23.67%
Inventory turnover = Sales/Inventory = Cost of Goods Sold/Average Inventory = 10.206
Receivable turnover = Net credit sales/ accounts receivable = 68.75%
Day sales in inventory = (Inventory/cost of goods sold) x 365 = 54.757
Day sales in receivables = (Accounts receivable/total credit sales) x number of days = 18.65
Total debt ratio = total debt/total assets = 1
Time interest earned ratio = EBIT (earnings before interest and tax)/total interest payable = 1.326
Cash coverage ratio = 0.07438
5.
Short-term
a) Net Income = 135,750$
b) OCF = 155,000$
2.
a) Equity Value = Net fixed assets – long-term liabilities
2006: $3600
2007: $3240
b) Net working capital = (current asset– current liabilities year 1)
Change = (CA-CL of years 1) – (CA-CL of year 2) = 972-727 = 245
3.
Common Size Income Statement:
Sales/Revenue = 100%
Cost of Goods Sold = 65.3%
Depreciation = 13%
Earnings before interest and taxes = 21.64%
Interest Paid = 16.32%
Taxable income = 53.25%
Taxes (34%) = 1.8%
Net income = 3.5%
Dividends =
Additonal Retained earnings =
Common Size Balance Statement 2006:
ASSETS
Cash = 2%
Accounts receivable = 3.73%
Inventory = 7.1%
Total Current Assets = 12.83%
Net Plant and Equipment = 87.19%
Total Net Assets = 100%
LIABILITIES
Accounts payable = 2%
Notes payable = 23.55%
Total = 25.55%
Long term debt = 30%
Common stock = 5%
Retained earnings = 39.29%
Total = 44.29%
Total liabilities = 100%
2007:
ASSETS
Cash = 2%
Accounts receivable = 3.73%
Inventory = 7.1%
Total Current Assets = 12.83%
Net Plant and Equipment = 87.19%
Total Net Assets = 100%
LIABILITIES
Accounts payable = 2.4%
Notes payable = 17.31%
Total = 19.71%
Long term debt = 34.60%
Common stock = 5%
Retained earnings = 40.7%
Total = 45.68%
Total liabilities = 100%
4. 2007
Current ratio = current assets / current liabilities = 54.77%
Quick ratio = cash ratio = (Current Assets - Inventories)/Current Liabilities = 23.67%
Inventory turnover = Sales/Inventory = Cost of Goods Sold/Average Inventory = 10.206
Receivable turnover = Net credit sales/ accounts receivable = 68.75%
Day sales in inventory = (Inventory/cost of goods sold) x 365 = 54.757
Day sales in receivables = (Accounts receivable/total credit sales) x number of days = 18.65
Total debt ratio = total debt/total assets = 1
Time interest earned ratio = EBIT (earnings before interest and tax)/total interest payable = 1.326
Cash coverage ratio = 0.07438
5.
Short-term