2019 Birzeit University Department of Finance and Banking Principles of Finance FINN 1300 Fall Semester 2020/2021 Instructions Due date: December 17 2020, by 3:00 pm. This is a group project every 5 student together. You can choose your partner by yourself. Submit a soft copy of the answers to the four questions below via Retaj. This project is worth 15% of your final grade. Suppose you are interested in evaluating Ashmont Cycles Corporation. Given the corporation's income statement and balance sheet, answer the following questions 1. Calculate the Ashmont Cycles Corporation financial ratios for the years 2019 and 2020. (6 marks) Financial ratio 2020 Current ratio Inventory turnover Average collection period Total asset turnover Debt ratio Debt to equity ratio Times interest earned ratio Gross profit margin Operating profit margin Net profit margin Return on Assets(ROA) Return on equity (ROE) 2. Analyze the overall financial situation from a time-series viewpoint. Break yout analysis into an evaluation of the firm's liquidity, activity, debt, and profitability (2 marks) 3. Prepare the cash flow statement for Ashmont Cycles Corporation for the year ended December 31" 2020 using the indirect method. (4 marks) 4. Ashmont Cycles Corporation estimates its sales for the 2021 financial year will be 5500,000. No new borrowing was obtained and therefore, the interest expense will remain unchanged $1,200 during 2021. Compile the Pro forma income statement for Ashmont Cycles Corporation for the year 2021 using percent of sales method. (3marks) B D E G Astmont Cycles Balance Sheet As of December 31, 2019 and 2020 2019 2020 8,000 2.500 65,000 1.500 500 77 500 12.000 2.400 9.600 57,100 5 3,368 2,200 71,500 1,800 600 79,468 17,400 (3,480 13,920 93,388 $ Assets Cash Accounts receivable Inventory Prepaid experses Other current assets Total current assets Property, plant and equipment Accumulated depreciation Net property, plant, and equipment Total Assets Llabilities Accounts payable Line of credit Current portion of long-term debt Accrued expenses Total Current Liabilities Long-term debt Total Liabilities Owner's Equity Contributed capital Retained earnings Total Owner's Equity 3.000 10,000 4,000 1.100 18.100 16.000 34,100 $ 3,200 10,000 4,000 1.100 18.300 12.000 30,300 $ 50,000 3.000 53,000 $ 50,000 13.089 63,088 $ Ashinant Cycles Income Statement For the year ended December 31, 2019 and 2020 2019 2020 5155.000 85 DDD 70,000 5205,000 (100 000 99,000 Sales cost of goods sold Gross Profit Operating Expense Selling, general and administrative experies Utilities expense Rent expense Depreciation and amortization Total operating expenses Operating Income interest expense income before income Taxes income taxes (359) Net Income 140,000) 15,000) 10,000) 1.030 56.08D 13,920 11.200 12.720 14.452) $8,268 (58,000! 16,90 (16,2101 (1.000 B2.20 16,720 (1.200 15,520 (5,4329 $10,088 2019 Birzeit University Department of Finance and Banking Principles of Finance FINN 1300 Fall Semester 2020/2021 Instructions Due date: December 17 2020, by 3:00 pm. This is a group project every 5 student together. You can choose your partner by yourself. Submit a soft copy of the answers to the four questions below via Retaj. This project is worth 15% of your final grade. Suppose you are interested in evaluating Ashmont Cycles Corporation. Given the corporation's income statement and balance sheet, answer the following questions 1. Calculate the Ashmont Cycles Corporation financial ratios for the years 2019 and 2020. (6 marks) Financial ratio 2020 Current ratio Inventory turnover Average collection period Total asset turnover Debt ratio Debt to equity ratio Times interest earned ratio Gross profit margin Operating profit margin Net profit margin Return on Assets(ROA) Return on equity (ROE) 2. Analyze the overall financial situation from a time-series viewpoint. Break yout analysis into an evaluation of the firm's liquidity, activity, debt, and profitability (2 marks) 3. Prepare the cash flow statement for Ashmont Cycles Corporation for the year ended December 31" 2020 using the indirect method. (4 marks) 4. Ashmont Cycles Corporation estimates its sales for the 2021 financial year will be 5500,000. No new borrowing was obtained and therefore, the interest expense will remain unchanged $1,200 during 2021. Compile the Pro forma income statement for Ashmont Cycles Corporation for the year 2021 using percent of sales method. (3marks) B D E G Astmont Cycles Balance Sheet As of December 31, 2019 and 2020 2019 2020 8,000 2.500 65,000 1.500 500 77 500 12.000 2.400 9.600 57,100 5 3,368 2,200 71,500 1,800 600 79,468 17,400 (3,480 13,920 93,388 $ Assets Cash Accounts receivable Inventory Prepaid experses Other current assets Total current assets Property, plant and equipment Accumulated depreciation Net property, plant, and equipment Total Assets Llabilities Accounts payable Line of credit Current portion of long-term debt Accrued expenses Total Current Liabilities Long-term debt Total Liabilities Owner's Equity Contributed capital Retained earnings Total Owner's Equity 3.000 10,000 4,000 1.100 18.100 16.000 34,100 $ 3,200 10,000 4,000 1.100 18.300 12.000 30,300 $ 50,000 3.000 53,000 $ 50,000 13.089 63,088 $ Ashinant Cycles Income Statement For the year ended December 31, 2019 and 2020 2019 2020 5155.000 85 DDD 70,000 5205,000 (100 000 99,000 Sales cost of goods sold Gross Profit Operating Expense Selling, general and administrative experies Utilities expense Rent expense Depreciation and amortization Total operating expenses Operating Income interest expense income before income Taxes income taxes (359) Net Income 140,000) 15,000) 10,000) 1.030 56.08D 13,920 11.200 12.720 14.452) $8,268 (58,000! 16,90 (16,2101 (1.000 B2.20 16,720 (1.200 15,520 (5,4329 $10,088