From the following financial statements, compute the required ratios (for year 2002 and 2003) and analyse them with respect to the industry averages. FINANCIAL STATEMENTS INCOME STATEMENT FOR YEAR ENDING DECEMBER 31   2003 2002 2001 Sales   6,500,000.00       5,550,000.00   4,050,000.00 Cost of Goods Sold   3,965,000.00       3,385,500.00   2,430,000.00 Gross Profit   2,535,000.00       2,164,500.00   1,620,000.00 Depreciation       485,600.00           287,200.00       158,500.00 Other Operating expenses   1,690,000.00       1,387,500.00   1,012,500.00 EBIT       359,400.00           489,800.00       449,000.00 Interest       331,956.00           160,125.00         50,645.00 EBT         27,444.00           329,675.00       398,355.00 Income Taxes         10,978.00           131,870.00       159,342.00 Net Income         16,466.00           197,805.00       239,013.00               BALANCE SHEET FOR YEAR ENDING DECEMBER 31   2003 2002 2001 Cash 57,000.00 110,000.00 155,000.00 Accounts Receivable 95,000.00 59,000.00 45,000.00 Inventories 1,050,000.00 723,000.00 540,000.00 Prepaid expenses 42,000.00 36,000.00 25,000.00 Total Current assets 1,244,000.00 928,000.00 765,000.00 Property, Plant and Equipment 7,288,800.00 4,819,200.00 3,245,000.00 less: Accumulated Depreciation 2,432,800.00 1,947,200.00 1,660,000.00 Net Property, Plant and Equipment 4,856,000.00 2,872,000.00 1,585,000.00 Total Assets 6,100,000.00 3,800,000.00 2,350,000.00         Accounts Payable 440,556.00 165,000.00 99,000.00 Line of Credit 570,638.00 353,000.00 267,435.00 Current portion of long term debt 325,346.00 162,000.00 41,461.00 Total Current Liabilities 1,336,540.00 680,000.00 407,896.00 Long term debt 3,253,460.00 1,620,000.00 414,604.00 Equity 1,510,000.00 1,500,000.00 1,527,500.00 Total Liabilities and Equity 6,100,000.00 3,800,000.00 2,350,000.00                         Industry Averages Current ratio 1.9 Inventory turnover in days 60 Days Accounts receivables turnover in days 30 Days Fixed Assets Turnover 3.19 Total Assets Turnover 2 Debt ratio 30.00% Net Profit Margin 6.71% Gross Profit Margin 42.00% Return on assets 13.42% Return on Equity 19.17%

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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From the following financial statements, compute the required ratios (for year 2002 and 2003) and analyse them with respect to the industry averages.

FINANCIAL STATEMENTS

INCOME STATEMENT

FOR YEAR ENDING DECEMBER 31

 

2003

2002

2001

Sales

  6,500,000.00

      5,550,000.00

  4,050,000.00

Cost of Goods Sold

  3,965,000.00

      3,385,500.00

  2,430,000.00

Gross Profit

  2,535,000.00

      2,164,500.00

  1,620,000.00

Depreciation

      485,600.00

          287,200.00

      158,500.00

Other Operating expenses

  1,690,000.00

      1,387,500.00

  1,012,500.00

EBIT

      359,400.00

          489,800.00

      449,000.00

Interest

      331,956.00

          160,125.00

        50,645.00

EBT

        27,444.00

          329,675.00

      398,355.00

Income Taxes

        10,978.00

          131,870.00

      159,342.00

Net Income

        16,466.00

          197,805.00

      239,013.00

 

 

 

 

 

 

 

BALANCE SHEET

FOR YEAR ENDING DECEMBER 31

 

2003

2002

2001

Cash

57,000.00

110,000.00

155,000.00

Accounts Receivable

95,000.00

59,000.00

45,000.00

Inventories

1,050,000.00

723,000.00

540,000.00

Prepaid expenses

42,000.00

36,000.00

25,000.00

Total Current assets

1,244,000.00

928,000.00

765,000.00

Property, Plant and Equipment

7,288,800.00

4,819,200.00

3,245,000.00

less: Accumulated Depreciation

2,432,800.00

1,947,200.00

1,660,000.00

Net Property, Plant and Equipment

4,856,000.00

2,872,000.00

1,585,000.00

Total Assets

6,100,000.00

3,800,000.00

2,350,000.00

       

Accounts Payable

440,556.00

165,000.00

99,000.00

Line of Credit

570,638.00

353,000.00

267,435.00

Current portion of long term debt

325,346.00

162,000.00

41,461.00

Total Current Liabilities

1,336,540.00

680,000.00

407,896.00

Long term debt

3,253,460.00

1,620,000.00

414,604.00

Equity

1,510,000.00

1,500,000.00

1,527,500.00

Total Liabilities and Equity

6,100,000.00

3,800,000.00

2,350,000.00

 

 

 

 

             

 

Industry Averages

Current ratio

1.9

Inventory turnover in days

60 Days

Accounts receivables turnover in days

30 Days

Fixed Assets Turnover

3.19

Total Assets Turnover

2

Debt ratio

30.00%

Net Profit Margin

6.71%

Gross Profit Margin

42.00%

Return on assets

13.42%

Return on Equity

19.17%

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