Question

Financial Statements:

Reading and creating financial statements is very important in the finance world. Using the information below, please create an income statement and a balance sheet.  You may do so in a WORD or EXCEL document.

Sales	$55,000
Accumulated Depreciation	19,000
Cash	?
Cost of good sold	32,000
Accounts Receivable	7,300
Depreciation Expense	3,800
Accounts Payable	6,500
Interest Expense	2,600
Short-term notes payable	2,600
Income taxes	5,985
Inventories	4,700
Marketing, general and admin expenses	4,500
Gross fixed assets	64,800
Long-term debt	36,000
Common stock	12,000
Other assets	1,500
Retained earnings	13,850

For the income statement be sure to have two columns Dollar Value and Percentage of Sales...For example. (Sales 10,000, Cost of goods sold (COGS) 4,000 should be expressed in the following way.)

Dollar Value % of Sales

Sales $10,000 100%

COGS (4,000) (40%)

Gross profits $6,000 60%

You will follow a similar approach with the balance sheet. In this case the two columns would be titled Dollar Value and Percentage of Total Assets. Remember that in order to "BALANCE" Assets must EQUAL Liability and Equity.

Ratios:

Complete a financial analysis. You are asked to calculate the financial ratios for the the year 2015. Afterward, define and interpret the financial ratios for 2015. In other words, what does the ratio tell you, what is it for W&T, and what does it tell you about the company itself (interpret)? (Hint: Page 140-141 has the ratios and equations you need; they are also on the outline I give you. ) You may put your analysis in the format below or create your own format as long as it is easy to read.

Compute financial ratios.

Financial ratios                           2015   

Current ratio                                                  

Acid-test ratio                                               

Days in receivables                      

Days in inventory                        

Operating return on assets        

Operating profit margin            

Total asset turnover                       

Fixed asset turnover   

Debt ratio                                     

Times interest earned                     

Return on equity           

Return on Assets

When you get ready to define and interpret you can do so in the following manner. (EXAMPLE: Alphabet (Google) has a current ratio of 3.96.

*****Current ratio measures a firm's degree of liquidity by comparing its current assets to its current liabilities. For Google, the company has $3.96 in current assets, for every $1 in short term debt.

Answer 1

Income Statement
Particulars	Amount $	% of Sales	Particulars	Amount $	% of Sales
Cost of Good Sold	32,000	58%	Sales	55,000	100%
Depreciation	3,800	7%
Interest Expense	2,600	5%
Income Taxes	5,985	11%
Marketing, general and admin expenses	4,500	8%
Net Profit ( Balancing figure)	6,115	11%
Total	55,000	100%	Total	55,000	100%

Balance Sheet
Liabilities	Amount $	% of Total Assets	Assets	Amount $	% of Total Assets
Retained earnings	13,850	21%	Gross Fixed Assets	64,800	100%
Profit	6,115	9%	Accumulated Depreciation	(22,800)	-35%
Long Term debt	36,000	55%	Net Assets	42,000	65%
Short-term notes payable	2,600	4%	Inventories	4,700	7%
Accounts Payable	6,500	10%	Accounts Receivable	7,300	11%
			Other Assets	1,500	2%
			Cash	9,565	15%
Total	65,065	100%		65,065	100%

Ratios-

1. Current ratio =  

= 23065/9100

= 2.53 times

2. Acid Test = (Cash+ Account Receivables)/ Current Liabilites

= 18365/9100

= 2 times