13. Dick's Drapeties has gross sales of $15,000 per month half of which are on credit (paid within 30 days). Monthly expenses are as follows wages, $3000, utilities and rent, $2000, advertising $300, and miscella neous. $500. Inventory is purchased every three months and totals $30,000 for each order Yearly expenses paid for in advance are insurance of $1000 and a rent deposit of $700. Prepare a sw-month cash How statement for Dicks Drapenies. What advice would you give this business based on the cash flow statement? COMPREHENSIVE CASE DAN KIM: PART 4 Dan still needs to raise money to fund his business and is suro crowdfunding will work. He has listened to Sube and has invested a fait bit of time learning about the process of establishing a successtul crowdfunding campaign Dan has invested in a promotional video, written a great introduction and explanation for Ladder Helper and increased his social media contacts. Dan has also decided to offer one Ladder Helper per $30 donation as a reward to all backers for supporting his business venture. Dan and Suzle are now both excited about the possibilities of crowdfunding, and they decide to launch on March 15th, just prior to Spring when many people will be looking to complete renovations and contractors see a rise in their business. While the per are optimistic, Dan has also lowered his expectations about the number of backers ne anticipates and creates a campaign where he will meet his goal ir 500 people support his idea Dan understands that this will only result in $15,000, but would be enough money to prove his concept and allow him to consider other forms of financing On the day Ladder Helper's crowdfunding campaign taunches, Dan reaches out to all his social media contacts and asks them to share the crowdfunding ink and talk about the idea. Suzie also reaches out to her friends and family through social media and as luck would have it one of them wines for a national newspaper. Her cousin. who writes for the Notional Times and has a loyal Twitter following, loves the idea of the Ladder Helper and quickly shares the information on social media before following up with an article in the business section of the paper Between Don and Suzie's well-designed crowdfunding compaign, use of social media, and the free public relations their crowdfunding campaign exceeds expectations and in 30 days Dan has achieved donations from 2500 backers With $75,000 in what amounts to pressies Dan is convinced he must build his factory. After much discussion Suzie and he agree to mortgage their home and borrow money to build a facility. While a delays Dan's ability to complete his Ladder Helper tewards, Dan manages to quickly get a factory built, hire some help and start to build Ladder Helpers for his crowdfunding backers Dan realizes that while the $75.000 he raised through crowdfunding is a good start the business is far from sustainable. He is unsure how to promote the business though and doesn't want to spend any money on marketing as he is starting to worry, he may not make any money off of his crowdfunding campaign. With labout manufacturing and now mortgage costs, Dan is becoming increasingly concemed about his ability to manufacture the Ladder Helper at a reasonable cost Given his financial concerns. Dan raises the price of the Ladder Helper to 540 and invests time in promoting the Ladder Helper on social media and email While he doesn't bother creating a marketing plan, he does work tirelessly at night talking about his product on Facebook, emailing information to construction companies, hard- ware stores and sending Tweets. Don's hard work pays off and he is rewarded with an additional 1750 orders at $40 a Ladder Helper Although Dan underestimated many of his expenses and start-up costs, ne provided much of the labour and expertise himself to defray part of this shortfall. As the year progresses, orders for the Ladder Helper continue to increase as a result of Dan's marketing efforts, and Dan begins to think that the business could really work Suzie has kept track of the receipts and disbursements and at the end of the first year of operations takes all the financial information to their accountant. A couple of weeks later, the accountant calls them in They are very 348 PART 3 MANAGING THE SMALL BUSINESS disappointed in the results (see Table 9-A) While reviewing the statements with their accountant, she provides some industry averages to help them in planning for the next year (see Table 9-B They are quite nervous about taking the statements to their banker. Dan and Suzie are hopeful their investor wil see that sales are increasing and will be satisfied with this TABLE 9-A $145,000 $192.900 $47 900) The Ladder Helper Income Statement: Year 1 Sales 2500 a $30 $75.000 1750 $40 70.000 Cost of Goods Sold 4750 a $12 57.000 Wages 80,000 Employee Benefits 6,000 Utilities 17.000 Repairs & Maintenance 4.500 Insurance 1,000 Amortization 17.000 Interest and bank charges 10,400 Net Income The Ladder Helper Income Statement End of Year 1 Assets Cash $ 2.250 Accounts Receivable 3.800 Inventory 10.250 Building & Equipment 153,000 Land 50,000 Total Assets $219.300 Liabilities & Owner's Equity Accounts Payable $36.800 Bank Loan-Current Payable 23,400 Bank Loon-Long Term 117.000 Owner's Equity 42.100 Total Liabilities & Owner's Equity $219.300 TABLE 9-B SELECTED RATIOS FOR METAL FABRICATING COMPANIES Current Ratio Gross Margin Profit on Sales Profit on Net Worth Collection Period Inventory Turnover Debt to Equity 1.52:1 23.2% 6.1% 21.13% 59 days 4.2 Chapter 9 pg#372 - Dan Kim Case Study Dan's accountant has provided the industry average numbers for several ratios. Evaluate Dan's business using the same ratios as follows: The collection period is days 0.5 points Save Answer QUESTION 12 Chapter 9 pg#372 - Dan Kim Case Study Dan's accountant has provided the industry average numbers for several ratios. Evaluate Dan's business using the same ratios as follows: The inventory turnover is times in a year