• Liquidity ratios
o Current ratio
o Acid-test, or quick, ratio
o Receivables turnover
o Inventory turnover
• Profitability ratios
o Asset turnover
o Profit margin
o Return on assets
o Return on common stockholders’ equity
• Solvency ratios
o Debt to total assets
o Times interest earned
Show your calculations for each ratio.
Create a horizontal and vertical analysis for the balance sheet and the income statement.
Write a 350- to 700-word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:
What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?
Which users may be interested in each type of ratio?
What does the collected data reveal about the performance and position of the company?
Balance Sheets
12/31/2007
Current 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 $1,498,882.00
Liabilities
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 $1,498,882.00
Balance Sheets
12/31/2006
Current Assets
Cash $32,901.07
Accounts Receivable $198,281.67
Inventory $82,373.72
Total Current Assets $313,556.46
Fixed Assets
Vehicles $268,750.00
Tools $55,476.50
Less Accumulated Depreciation ($94,580.45)
Total Fixed Assets $229,646.05
Total Assets $543,202.51
Liabilities
Current Liabilities
Accrued Payroll Taxes $21,482.27
Accounts Payable $158,625.33
Total Current Liabilities $180,107.60
Long‐Term Liabilities
Auto Loans $0.00
Total Long‐Term Liabilities $0.00
Total Liabilities $180,107.60
Stockholders Equity
Common Stock (1,000,000 authorized shares at $1 par) $70,000.00
Retained Earnings ($380.65)
Net Income $293,475.56
Total Stockholders Equity $363,094.91
Total Liabilities & Stockholders Equity $543,202.51
Balance Sheets
12/31/2005 Current Assets
Cash $12,501.92
Accounts Receivable $36,595.21
Inventory $20,593.43
Total Current Assets $69,690.56
Fixed Assets
Vehicles $43,000.00 Tools $11,095.30
Less Accumulated Depreciation ($13,523.83)
Total Fixed Assets $40,571.48
Total Assets $110,262.04
Liabilities
Current Liabilities Accrued Payroll Taxes $4,991.53
Accounts Payable $690.00
Total Current Liabilities $5,681.53
Long‐Term Liabilities
Auto Loans $34,961.16
Total Long‐Term Liabilities $34,961.16
Total Liabilities $40,642.69
Stockholders Equity
Common Stock (1,000,000 authorized shares at $1 par) $70,000.00
Retained Earnings
Net Income ($380.65)
Total Stockholders Equity $69,619.35
Total Liabilities & Stockholders Equity $110,262.04
Cash Flow Statements
1/1/07 – 12/31/07 1/1/06 – 12/31/06 2/1/05 – 12/31/05Cash Flow from
Operating Activities
Net Income $769,000.80 293,475.56 ($380.65)
Adjustments to Net
Income
Decrease (Increase) in
Accounts Receivable ($612,765.79) ($161,686.46) ($36,595.21)
Increase (Decrease) in
Liabilities (A/P, Taxes Payable) $186,678.69 $174,426.07 $5,681.53
Net CasH Flow from
Operating Activites $342,913.70 $306,215.18 ($31,294.34)
Cash Flow fro Investing
Activites
Capital Expenditures ($55,476.50) ($270,131.20) ($54,095.30)
Depreciation and
Amortization $94,925.75 $81,056.63 $13,523.83
Decrease (Increase) in
Inventories ($123,560.58 ($61,780.29) ($20,593.43)
Net Cash Flow from
Investing Activites ($84,111.33) ($250,854.87) ($61,164.91)
Cash Flow from
Financing Activites
Dividends Paid
Sale (Repurchase) of
Stock $70,000.00
Increase (Decrease) in
debt ($34,961.16) $34,961.16
Other cash flows from
financing activites
Net Cash Flow from
Financing Activities $0.00 ($34,961.16) $104,961.16
Cash at beginning of
period $258,802.37 $20,399.15 $12,501.92
Cash at end of period $291,703.44 $32,901.07 $12,501.92
Income Statements
1/1/2007 – 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 $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 $791,934.13 $3,124,026.98
$3,124,026.98
Net Income $769,000.80
Income Statements
1/1/2006 – 12/31/2006
Revenue $1,903,504.00Direct Expenses
Salaries & Wages $266,490.56
Traps & Chemicals $769,239.08
Fuel $6,605.36
Vehicle Maintenance $38,070.08
$1,080,405.08 $1,080,405.08
Indirect Expenses
Rent $18,540.00 Licenses $985.00
Interest Expense $3,496.12
Insurance $50,662.00
Admin. Salaries $66,026.00
Commissions $58,070.08
Payroll Taxes $42,964.53
Legal Expenses $3,045.00
Accounting Fees $5,000.00
Office Supplies $3,900.00
Utilities $4,802.48
Advertising Expenses $97,210.00
Bad Debts $61,865.53
Depreciation Expense $81,056.63
Misc. Expenses $32,000.00
$529,623.36 $529,623.36
$1,610,028.44 $1,610,623.44
Net Income $293,475.56
Income Statements
2/1/2005 – 12/31/2005
Revenue $439,142.54
Direct Expenses Salaries & Wages $54,834.19
Traps & Chemicals $177,465.14
Fuel $1,523.87
Vehicle Maintenance $360.00
$234,183.20 $234,183.20
Indirect Expenses Rent $17,274.19
Licenses $385.00
Interest Expense $2,796.89
Insurance $10,000.00
Admin. Salaries $31,096.00
Commissions $4,824.85
Payroll Taxes $9,983.05
Legal Expenses $800.00
Accounting Fees
Office Supplies $3,000.00
Utilities $3,559.50
Advertising Expenses $92,900.00
Bad Debts $5,196.68
Depreciation Expense $13,523.83
Misc. Expenses $10,000.00
$205,339.99 $205,339.99
$439,523.19 $439,523.19
Net Income ($380.65)
TUTORIAL PREVIEW
Show your calculations for each ratio.
Presentation of the Liquidity, Profitability and Solvency Ratios of Berry’s Bug Blasters
Ratio
|
Year
|
Calculation
|
Liquidity Ratios:
| ||
Current Ratio = Current Assets/ Current liabilities
|
2007
|
= 1,308,685.20/ 366,786.29
= 3.57 times
|
2006
|
= 313,556.46/ 180,107.60
= 1.74 times
|
File name: Berrys Bug Blasters .doc File type: .doc PRICE:$22
