524257 374554 10000 5000 29408 1000 Sales Operating Costs Depreciation Expense Interest Expense Tax Expense Cash...

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524257 374554 10000 5000 29408 1000 Sales Operating Costs Depreciation Expense Interest Expense Tax Expense Cash Receivables Assignment: Prepare an income statement and a balance sheet for is company using the information provided. Calculate: 1. Curr

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Answer 1

Answer #1

Income statement and Balance sheet and first 4 parts are being answered here.

Income statement:

Description	Amount
Revenues & other items:
Sales	$524257
Total revenues & other items	$524257
Expenses & other items:
Operating costs	$374554
Depreciation expense	$10000
Interest expense	$5000
Tax expense	$29408
Total expenses & other items	($418962)
Net income	$105295

Balance sheet:

Liabilities & stockholder's equity	Amount	Assets	Amount
Payables	$11000	Cash	$1000
Accrued expenses	$10000	Receivables	$30000
Long term loan	$50000	Inventories	$62425
Common equity	$72425	Fixed assets, net	$50000
Total liabilities & equity	$143425	Total assets	$143425

1. Current ratio = Current assets / Current liabilities

Current assets = Cash + Receivable + Inventory

Current assets = $1000 + $30000 + $62425 = $93425

Current liabilities = Accounts payable + Accrued expenses

Current liabilities = $11000 + $10000 = $21000

Now, putting these values in the current ratio formula, we get,

Current ratio = $93425 / $21000 = 4.44

2. Quick ratio = Current assets – Inventories – Prepaid expenses / Current liabilities

Current assets = $93425, Current liabilities = $21000, Inventories = $62425

Quick ratio = ($93425 - $62425) / $21000

Quick ratio = $31000 / $21000 = 1.48

3. NWC to total assets ratio:

Net working capital = Current assets - Current liabilities

Net working capital = $93425 - $21000 = $72425

Total assets = $143425 (as per balance sheet above)

Putting the values in the above formula, we get,

NWC to total assets ratio = $72425 / $143425 = 0.50

4. Ratio of total debt & liabilities to total assets = Total liabilities / Total assets

Total liabilities = Payables + Accrued expense + Long term loan

Total liabilities = $11000 + $10000 + $50000 = $71000

Total assets = $143425

Putting the values in the above formula, we get,

Ratio of total debt & liabilities to total assets = $71000 / $143425 = 0.49

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