A1 Sweet Dreams Corp. D G H 1 J K L E F Sweet Dreams Corp. Balance Sheet As of Dec. 31 2020 Assets 2020 Cash 431,000 Accounts Receivable 503,000 2019 339,000 365,000 Ratio Current Ratio Quick Ratio Value 2.5 0.6 Value 0.9 Ratio Debt to Equity Long-Term Debt to Equity Times Interest Earned 40.00% Inventories 289,000 300,000 2.5 Total Current Assets 1,223,000 1,004,000 Cash Coverage Ratio 3.5 B 1 Sweet Dreams Corp. 2 Income Statement 3 For the Year Ended Dec. 31 2020 4 2020 2019 5 Sales 3,074,000 2,567,000 Cost of Goods Sold 2,088,000 1,711,000 6 Gross Profit 986,000 856,000 7 Selling and G&A 294,000 295,000 8 Expenses Fixed Expenses 35,000 35,000 9 Depreciation Expense 239,000 223,000 10 11 EBIT 418,000 303,000 Interest Expense 93,000 91,000 12 Earnings Before 325,000 212,000 13 Taxes Taxes 94,000 64,000 14 Net Income 231,000 148,000 15 Inventory Turnover 6.5 Ratio Accounts Receivable 8 Turnover Ratio Average Collection 40 Period Fixed Asset Turnover 2 Gross Fixed Assets 4,669,000 4,322,000 Gross Profit Margin 20.00% 2,295,000 2,056,000 Operating Profit Margin 7.00% Accumulated Depreciation Net Fixed Assets Total Assets 2,374,000 2,200,000 3,597,000 3,270,000 Total Asset Turnover Total Debt Ratio 2 50.00% Net Profit Margin Return on Total Assets 5.00% 5.00% Liabilities and Owners' Equity 20.00% Return on Equity 8.00% Accounts Payable Long-Term Debt Ratio LTD to Total Capitalization 382,000 270,000 30.00% 10.00% Return on Common Equity 16 17 18 19 20 21 Short-term Notes 79,000 99,000 Payable Accrued Expenses 159,000 114,000 Total Current 620,000 483,000 Liabilities Long-term Debt 1,023,000 967,000 Total Liabilities 1,643,000 1,450,000 Common Stock 819,000 808,000 Retained Earnings 1,135,000 1,012.000 Total Shareholder's 1,954,000 1,820,000 Equity Total Liabilities and 3,597,000 3,270,000 Owners' Equity 22 23 24 A1 X fx Please complete the yellow highlighted parts. Please s D E G F 2 Industry 2020 e)-1 Analysis Individual Interpretation A B C a) 3 Sweet Dreams, Corp. 4 Ratios 2020 2019 5 Liquidity Ratios 6 Current Ratio 7 Quick Ratio 8 Efficiency Ratios 9 Inventory Turnover Ratio 10 Accounts Receivable Turnover Ratio 11 Average Collection Period 12 Fixed Asset Turnover 13 Total Asset Turnover 14 Leverage Ratios 15 Total Debt Ratio 16 Long-Term Debt Ratio 17 LTD to Total Capitalization 18 Debt to Equity 19 Long-Term Debt to Equity 20 Coverage Ratios 21 Times Interest Earned 22 Cash Coverage Ratio 23 Profitability Ratios 24 Gross Profit Margin 25 Operating Proft Margin 26 Net Proft Margin 27 Return on Total Assets 28 Return on Equity 29 Return on Common Equity 30 b) 31 Du Pont ROE 32 Market Value of Equity 1,200,000 1,200,000 33 34 c) 35 Z-Score for Public Firms 36 Z-Score for Private Firms 37 38 d) 39 Sweet Dreams, Corp. 40 Economic Profit Calculations 41 2020 2019 42 Tax Rate 28.92% 30.19% 43 NOPAT 297,102 211,528 44 Total Operating Capital 3,056,000 2,886,000 45 After-tax Cost of Capital 12% 12% 46 Dollar Cost of Capital 366,720 346,320 47 Economic Profit A1 Sweet Dreams Corp. D G H 1 J K L E F Sweet Dreams Corp. Balance Sheet As of Dec. 31 2020 Assets 2020 Cash 431,000 Accounts Receivable 503,000 2019 339,000 365,000 Ratio Current Ratio Quick Ratio Value 2.5 0.6 Value 0.9 Ratio Debt to Equity Long-Term Debt to Equity Times Interest Earned 40.00% Inventories 289,000 300,000 2.5 Total Current Assets 1,223,000 1,004,000 Cash Coverage Ratio 3.5 B 1 Sweet Dreams Corp. 2 Income Statement 3 For the Year Ended Dec. 31 2020 4 2020 2019 5 Sales 3,074,000 2,567,000 Cost of Goods Sold 2,088,000 1,711,000 6 Gross Profit 986,000 856,000 7 Selling and G&A 294,000 295,000 8 Expenses Fixed Expenses 35,000 35,000 9 Depreciation Expense 239,000 223,000 10 11 EBIT 418,000 303,000 Interest Expense 93,000 91,000 12 Earnings Before 325,000 212,000 13 Taxes Taxes 94,000 64,000 14 Net Income 231,000 148,000 15 Inventory Turnover 6.5 Ratio Accounts Receivable 8 Turnover Ratio Average Collection 40 Period Fixed Asset Turnover 2 Gross Fixed Assets 4,669,000 4,322,000 Gross Profit Margin 20.00% 2,295,000 2,056,000 Operating Profit Margin 7.00% Accumulated Depreciation Net Fixed Assets Total Assets 2,374,000 2,200,000 3,597,000 3,270,000 Total Asset Turnover Total Debt Ratio 2 50.00% Net Profit Margin Return on Total Assets 5.00% 5.00% Liabilities and Owners' Equity 20.00% Return on Equity 8.00% Accounts Payable Long-Term Debt Ratio LTD to Total Capitalization 382,000 270,000 30.00% 10.00% Return on Common Equity 16 17 18 19 20 21 Short-term Notes 79,000 99,000 Payable Accrued Expenses 159,000 114,000 Total Current 620,000 483,000 Liabilities Long-term Debt 1,023,000 967,000 Total Liabilities 1,643,000 1,450,000 Common Stock 819,000 808,000 Retained Earnings 1,135,000 1,012.000 Total Shareholder's 1,954,000 1,820,000 Equity Total Liabilities and 3,597,000 3,270,000 Owners' Equity 22 23 24 A1 X fx Please complete the yellow highlighted parts. Please s D E G F 2 Industry 2020 e)-1 Analysis Individual Interpretation A B C a) 3 Sweet Dreams, Corp. 4 Ratios 2020 2019 5 Liquidity Ratios 6 Current Ratio 7 Quick Ratio 8 Efficiency Ratios 9 Inventory Turnover Ratio 10 Accounts Receivable Turnover Ratio 11 Average Collection Period 12 Fixed Asset Turnover 13 Total Asset Turnover 14 Leverage Ratios 15 Total Debt Ratio 16 Long-Term Debt Ratio 17 LTD to Total Capitalization 18 Debt to Equity 19 Long-Term Debt to Equity 20 Coverage Ratios 21 Times Interest Earned 22 Cash Coverage Ratio 23 Profitability Ratios 24 Gross Profit Margin 25 Operating Proft Margin 26 Net Proft Margin 27 Return on Total Assets 28 Return on Equity 29 Return on Common Equity 30 b) 31 Du Pont ROE 32 Market Value of Equity 1,200,000 1,200,000 33 34 c) 35 Z-Score for Public Firms 36 Z-Score for Private Firms 37 38 d) 39 Sweet Dreams, Corp. 40 Economic Profit Calculations 41 2020 2019 42 Tax Rate 28.92% 30.19% 43 NOPAT 297,102 211,528 44 Total Operating Capital 3,056,000 2,886,000 45 After-tax Cost of Capital 12% 12% 46 Dollar Cost of Capital 366,720 346,320 47 Economic Profit