INCOME STATEMENT, 2018 BALANCE SHEET, as of Dec 31, 2018 Sales $10,000 ASSETS Cost of goods...
|
INCOME STATEMENT, 2018 |
|
BALANCE SHEET, as of Dec 31, 2018 |
|
Sales |
|
$10,000 |
|
ASSETS |
|
Cost of goods sold |
|
4,000 |
|
Cash |
|
$5,000 |
|
Gross profit |
|
$6,000 |
|
Accounts receivable |
|
3,000 |
|
S, G & A expenses |
|
3,000 |
|
Inventory |
|
17,000 |
|
EBIT |
|
$3,000 |
|
Current assets |
|
$25,000 |
|
Interest |
|
$200 |
|
Equipment (gross) |
|
27,000 |
|
Before-tax earnings |
|
$2,800 |
|
Less Accum Depreciation |
|
(12,000) |
|
Taxes |
|
1,000 |
|
Equipment (net) |
|
$15,000 |
|
Net income |
|
$1,800 |
|
Total assets |
|
$40,000 |
|
LIABILITIES AND EQUITY |
|
EPS |
|
$1.80 |
|
Accounts payable |
|
$17,000 |
|
Current liabilities |
|
$17,000 |
|
Dividends |
|
$600 |
|
Long-term debt |
|
$3,000 |
|
Addition to retained earnings |
|
$1,200 |
|
Total liabilities |
|
$20,000 |
|
Common stock (1,000 shares) |
|
$7,000 |
|
Retained earnings |
|
$13,000 |
|
Total equity |
|
$20,000 |
|
Total liabilities & Equity |
|
$40,000 |
|
Joe's Fly-by-Night Oil |
• Prepare a graph of sales and net income for the years 2015 – 2018. For the purposes of this exercise, assume the following historical sales and net income figures for Joe’s Fly-By-Night Oil:
Year Sales Net Income
2015 $8,200 $1,500
2016 $8,000 $1,400
2017 $9,000 $1,600
2018 $10,000 $1,800
Comment on the results displayed on the graph.
• Prepare a pie chart of Joe’s Fly-By-Night Oil’s expense distribution for 2018 and comment on the results displayed.
• Prepare a pie chart of Joe’s Fly-By-Night Oil’s asset distribution for Dec 31, 2018 and comment on the results displayed.
• Prepare a pie chart of Joe’s Fly-By-Night Oil’s capital structure for Dec 31, 2018 and comment on the results displayed.
Homework Answers
While we see that the sale trend is moving upwards, the Net income is also increasing but at a slower rate. Yet the net income is directly proportional to sales and increases with increase in sales. This shows that the company is able to maintain its cost benefit ratio.
2: 
The major portion of expenses
is cost of goods sold. S,G and A expenses form the other major part
of the expenses. This is the portion that the company needs to
review since it is alsmost as much as the cost of goods sold.
3: 
The company has substantial
amounts of current assets. This is good in terms of liquidity of
the business.
4: 
The capital comprises of Equity and lesser portion is debt. This is a good indicator in terms of capital structure of the business.
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INCOME STATEMENT, 2018
BALANCE SHEET, as of Dec 31, 2018
Sales
$10,000
ASSETS
Cost of goods...
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