15,438 (50) 15,388 4,723 10,665 CAPTAIN JET INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014 Sales Revenue Less: Sales Return Net Sales Cost of Goods Sold Gross Profit Utilities Expenses Salary and Wages Expenses Rent Expenses Depreciation Expenses Interest Expenses Supplies Expenses Bad Debt Expenses Total Operating Expenses Earnings before Income Taxes Income Tax Expenses Earnings after Income Taxes 1,519 5,688 313 1,781 788 50 163 10,300 364 333 CAPTAIN JET INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014 Retained Earnings, Beginnit Net Income/Loss Dividends Payment Retained Earnings, End of t 19,031 333 (100) 19,264 CAPTAIN JET INC. BALANCE SHEET 31-Dec-13 5,150 6,850 5,000 10,600 7,088 5,052 68 500 23,307 68 63 17,130 0 31-Dec-14 Current Assets Cash Accounts Receivable Inventories Prepaid Insurance Prepaid Rent Total Current Assets Non-Current Assets Long-term Investments Investments in equity securities Land held for future development Property, Plant, and Equipment Buildings Less: Accumulated Depreciation Intangible Assets Capitalized Development Costs Goodwill Other Identifiable Intangible Assets Total Non-Current Assets Total Assets 6,375 6,375 5,688 5,688 48,875 (25,219) 47,000 (23,438) 1,000 9,500 6,000 52,219 75,526 1,000 9,500 6,000 52,125 69,255 0 4,188 6,688 188 225 1,500 1,086 825 156 10,668 188 1,500 1,055 825 0 7,755 15,000 13,750 Current Liabilities Accounts payable Salary and Wages Payable Interest Payable Unearned Revenue Income Tax payable Property taxes payable Utilities payable Total Current Liabilities Non-Current Liabilities Notes payable Provisions Related to Pensions Bonds Payable Total Non-Current Liabilities Total Liabilities Stockholders' Equity Common Stock ($10 par, 11,000 and 10,000 shares) Preferred Stock (5% dividend, $100 par values, 1050 and 100 Paid-in-capital - Common Stock Paid-in-capital - Preferred Stock Retained Earnings Accumulated Other Comprehensive Income Less: Treasury Stock Total Stockholders' Equity Total Liabilities and Stockholders' Equity 15,000 25,668 13,750 21,505 13,750 13,125 3,438 1,250 19,264 625 (1,594) 49,858 75,526 12,500 12,500 3,438 1,250 19,031 625 (1,594) 47,750 69,255 Calculate the following ratios for year 2014 (round all ratios to two places behind the decimal): 1 Working capital 2 Current ratio 3 Acid test ratio 4 Accounts receivable turnover (use net sales as numerator) 5 Collection period of receivables (use 360 days in each year) 6 Accounts payable turnover ratio = 7 Inventory turnover ratio 8 Days to sell inventory 9 Debt-to-Equity ratio 10 Times interest earned 11 RNOA (assume 12% tax rate) 12 ROCE Provide projected Income Statement, Retained Earnings statement and Projected Balance Sheet on the right using the following assumptions: 1 sales growth is 110%; sales return, as a percentage of sales revenue, does not change 2 Gross profit margin is the same as 2014 profit margin 3 Depreciation expense/Prior PPE (gross) = 4% 4 Interest expense/Prior year long-term debt = 6% 5 All other expenses (insurance, supplies, utilities, bad debt and rent) grow at the same rate as sales growth. 6 Income tax expense/ pre-tax income = 12% 7 A/R turnover is the same as that calculated for year 2014 8 A/P turnover is the same as that calculated for year 2014 9 Inventory turnover is the same as that calculated for year 2014 10 There is no change in current assets other than Cash, A/R and inventory 11 Capital expenditure/Sales -7% 12 Assume no change in long-term assets except for PP&E. 13 Assume no change in all liabilities, excpet for A/P 14 Assume no change in shareholders' Equity except for Retained Earnings 15 No dividend is paid on common stock and 5% dividend is paid on preferred stock CAPTAIN JET INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014 Sales Revenue step 1 Less: Sales Return step 2 Net Sales Cost of Goods Sold step 4 Gross Profit step 3 Utilities Expenses step 5 Salary and Wages Expenses step 5 Rent Expenses step 5 Depreciation Expenses step 7 Interest Expenses step 6 Supplies Expenses step 5 Bad Debt Expenses step 5 Total operating Expenses Earnings before Income Taxes Income Tax Expenses step 8 Earnings after Income Taxes step4 step 4 Non-Current Assets Long-term Investments Investments in equity securit Land held for future develop Property, plant, and Equipment Buildings Less: Accumulated Depreciat Intangible Assets Capitalized Development Co Goodwill Other Identifiable Intangible Total Non-Current Assets Total Assets step 5 step 6 step 7 step 7 step 7 Use calculated A/P turnover from "ratios" Current Liabilities Accounts payable Salary and Wages Payable Interest Payable Unearned Revenue Income Tax payable Property taxes payable Utilities payable Total Current Liabilities step 8 step 9 step 9 step 9 step 9 step 9 step 9 step 10 Non-Current Liabilities Notes payable Provisions Related to Pensions Bonds Payable Total Non-Current Liabilities Total Liabilities Stockholders' Equity Common Stock Preferred Stock (5% dividend) Paid-in-capital - Common Stock Paid-in-capital - Preferred Stock Retained Earnings Accumulated Other Comprehen Less: Treasury Stock Total Stockholders' Equity Total Liabilities and Stockholders' Equity step 12 step 12 step 12 step 12 step 11 step 12 step 12