Solution 1 Income Statement Sales Cost of Goods Sold Gross Margin Expenses
Solution Income Statement Sales Cost of Goods Sold
Solution Income Statement Sales Cost of
Statement Sales Cost of Goods Sold Gross Margin Expenses
Solution Income Statement Sales Cost
of Goods Sold Gross Margin Expenses
Solution Income Statement Sales
Solution Income
(Solution) 1 Income Statement Sales Cost of Goods Sold Gross Margin Expenses:

Category: General
Words: 1050
Amount: $12
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Paper instructions

 You are telling me a story of how you arrived at your decisions or recommendations.  You must tie in the numbers you calculate to the story you tell.  In other words, the numbers must support your “story” and the story must support your numbers.  Be sure to state an opinion or decision in all cases where it is called for. Provide a written analysis of the ratios and financial statements.  Evaluate each using the type of ratio (liquidity, profitability etc.).  What information in the ratios is positive or negative for the company and why.  Based on the information you have calculated, would you buy stock in the company.  Why or why not?  If you buy it, what would you be watching as an indication that you need to sell it?  These questions are starting points to your analysis not the limit to it.  Please note, there is no correct answer as to whether or not you buy the stock but you have to state your reasoning clearly and have it tie out to the numbers in the financial statement and the ratios.  This should include the trends in the company’s ratios and in comparison to the industry averages.Discuss the outlook for the company based on each scenario and historic information.  Which actual ratios raise potential issues for management and how would you suggest improving them.  Does the forecasted ratios address any of the issues or raise additional ones?  What do you think of the overall health of the company?  Do you think the forecast actions (buying machinery, raising debt etc.) are the correct ones to take based on how they could affect the company?  This information could also be included in your discussion of the forecast 2016 ratios and the related analysis.1 Income Statement 2014 2015 2016 Increase 5% 2016 decrease 1% 2016 Increase 8% Sales 1,725,000 1,841,500 1,933,575 1,823,085 1,988,820 Cost of Goods Sold 1,385,550 1,472,500 1,568,744 1,533,387 1,586,422 Gross Margin 339,450 369,000 364,831 289,698 402,398 Expenses: Selling Expenses 132,750 139,675 146,679 141,154 149,441 General and Admin Expense 82,350 92,422 73,672 71,462 74,776 DepreciaTon 25,000 30,250 37,500 37,500 37,500 Interest Expense 18,300 19,550 21,000 21,000 21,000 Total Expenses 258,400 281,897 278,850 271,116 282,717 Proft beFore Tax 81,050 87,103 85,981 18,582 119,680 ±ax Expenses 32,420 34,841 34,392 7,433 47,872 Net Income 48,630 52,262 51,588 11,149 71,808 Statement oF Retained Earnings Balance at beginning of year 248,798 276,678 305,940 305,940 305,940 Net Income 48,630 52,262 51,588 11,149 71,808 Common Shareholder Dividends 20,750 23,000 25,000 25,000 ### Balance at end oF year 276,678 305,940 332,528 292,089 352,748 Balance Sheet Assets Current Assets: Cash 123,000 199,615 207,462 Accounts Receivable 322,350 330,450 333,755 Inventory 303,750 292,175 305,675 Total Current Assets 749,100 822,240 846,892 Gross Fixed Assets 650,000 675,000 750,000 Accumulated DepreciaTon 93,750 556,250 124,000 551,000 161,500 588,500 Total Assets 1,305,350 1,373,240 1,435,392 Liabili±es and Equity Current Liabili±es: Accounts Payable 160,750 171,900 175,338 Accruals 101,072 100,650 107,350 Notes Payable 202,350 208,500 195,675 Total Current Liabili±es 464,172 481,050 478,363 Long-±erm Debt 245,750 267,500 305,751 Total Liabili±es 709,922 748,550 784,114 Stockholders Equity Common Stock 25,000 25,000 25,000 Paid In Capital In Excess of Par 293,750 293,750 293,750 Retained Earnings 276,678 305,940 332,528 Total Stockholders Equity 595,428 624,690 651,278 Total Liabili±es and Equity 1,305,350 1,373,240 1,435,392 Cash ²low Statement 2015 Cash ²rom Opera±ng Ac±vi±es Net Income 52,262 Add DepreciaTon 30,250 Increase in Accounts Receivable (8,100) Decrease in Inventories 11,575 Increase in Accounts Payable 11,150 Decrease in Accruals (422) Increase in Notes Payable 6,150 Cash provided by opera±ng ac±vi±es 102,865 Cash ²rom Inves±ng Ac±vi±es Purchase of Fixed Assets (25,000) Cash used by opera±ng ac±vi±es (25,000) Cash ²rom ²inancing Ac±vi±es Payment od dividend (23,000) Increase in long term debts 21,750 Cash used by fnancing ac±vi±es (1,250) Net Increase in Cash 76,615 Cash Balance at beginning 123,000 Cash Balance at end 199,615

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