CMGT $5330$ Construction Cost Management

HW$03$: Analysis of Finanolal Statement

Instructor: Prof. Minkyyum Kim

Total Credit: $100$ Points

Due: Refer to Blackboard

Course Level Objectives:

CLO$2$: Demonstrate knowledge of construction accounting and financing managonent principles,

Weekly Learning Objectives:

W$4$LOI: Calculate deprecation using the straight$-$line, sum$-$of$-$the$-$years, and declining$-$balance methods.

W$4$LO$2$: Calculate the financial ratios for a construction company and compare them to industry averages.

Submission: Upload your homework on Blackboard as a word document. Handwritten documents are not accepted.

Rename your file as $\text{'}$HW$03-$LasiName$-$FirstName.docx.$\text{'}$ Failing to follow these requirements will result in a

deduction of $\text{'}$S points.

Assignment Descriptions:

Answer the following questions.

In $2018,$ your company purchased a front$-$end loader for $$150,000,$ a dump ruck for $$85,000,$ and a dumping

trailer $($pup$)$ for the dump truck for $$38,000.$ The front$-$end loader was placed in service in April and the dump

truck and dumping trailer were placed in service in July. In $2019,$ your company purchased three side$-$dump

trailers far $$65,000$ each and three tractors to pull the side$-$dump trailers for $$68,000$ each, which were placed in

service in May. In December of $2020,$ your company purchased a dump tnuck for $$87000.$ Determine the

depreciation allowed for tax puposes for the $2020$ tax year. The tux year runs fram January to December

Ignore all Section $179$ deductions. Hint: The tractors have a different recovery period than the rest of the

equipment.

A construction company's financial statements are shown in Figure $2-1$ and Figure $2-2.$ Detemume the listed

financial ratios for this company and comment whether the company's financtal operations are sound or not for

each of the ratios.

Quick ratio

Current ratio

Current liabilities to net worth ratio

Debt to equity ratio

Fixed assets to net worth ratio

Current assets to total assets ratio

Collectian period $($with and without retention$)$

Assets to revenues ratio

Gross profit margin

Pretax and after$-$tax profic margin

Pretax and after$-$tax return on assets

Pretax and after$-$tax return on equity