- Compute the financial ratios discussed for Wholesome Foods for 2017 & 2018
- Prepare a cash flow statement for the firm described for 2017 & 2018
1. Compute the financial ratios discussed in the chapter for Wholesome Foods for 2017 and 2018. 2017 2018 Current ratio (hint for 2017 138,300/75,000) Return on assets Operating profit margin Total asset turnover Debt ratio Return on equity 2. Prepare a cash flow statement for the firm for 2017 and 2018 . 2017 2018 Firm's cash flows: Operating Income Depreciation Earnings before interest, tax and depreciation Cash-taxes After tax cash flows from operations Changes in net working capital: Change in current assets (hint for 2017 138,300 - 115,200) Change in non-interest-bearing s/t debt (hint for 2017 75000-69000) Change in new working capital Investment in fixed assets (hint for 2017 664,000-650000) Decrease/ Increase in other assets Financing cash flows: Interest Dividends Financing cash flows \begin{tabular}{lrrr} Assets & 2016 & 2017 & 2018 \\ \hline Cash & $21,000 & $20,200 & $25,000 \\ Accounts receivable & 42,000 & 33,000 & 46,000 \\ Inventory & 51,000 & 84,000 & 96,000 \\ Prepaid rent & 1,200 & 1,100 & 2,000 \\ Total current assets & $115,200 & $138,300 & $169,000 \\ Gross property, plant, and equipment & 650,000 & 664,000 & 740,000 \\ Accumulated depreciation & (364,000) & (394,000) & (434,000) \\ Net property, plant, and equipment & $286,000 & $270,000 & $306,000 \\ TOTAL ASSETS & $401,200 & $408,300 & $475,000 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline Debt (Lia bilities) and Equity & 2016 & 2017 & 2018 \\ \hline Accounts payable & $48,000 & $57,000 & $52,400 \\ \hline Accrued expenses & 9,500 & 9,000 & 12,000 \\ \hline Short-term notes & 11,500 & 9,000 & 20,000 \\ \hline Total current liabilities & $69,000 & $75,000 & $84,400 \\ \hline Long-term debt & $160,000 & $150,000 & $185,000 \\ \hline Common stock & $22,200 & $22,200 & $34,500 \\ \hline Retained earnings & 150,000 & 161,100 & 171,100 \\ \hline Total owners' equity & $172,200 & $183,300 & $205,600 \\ \hline TOTAL DEBT AND EQUTY & $401,200 & $408,300 & $475,000 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Income Statement & 2017 & 2018 \\ \hline Sales & $600,000 & $650,000 \\ \hline Cost of goods sold & (460,000) & (487,500) \\ \hline Gross profits & $140,000 & $162,500 \\ \hline \multicolumn{3}{|l|}{ Operating expenses: } \\ \hline General and administrative expenses & $30,000 & $37,500 \\ \hline Depreciation expense & 30,000 & 40,000 \\ \hline Total operating expenses & $60,000 & $77,500 \\ \hline Operating profits & $80,000 & $85,000 \\ \hline Interest expense & (10,000) & (12,000) \\ \hline Prof its before taxes & $70,000 & $73,000 \\ \hline Taxes & (27,100) & (30,000) \\ \hline Net profits & $42,900 & $43,000 \\ \hline Net profits & $42,900 & $43,000 \\ \hline Dividends paid & (31,800) & (33,000) \\ \hline Addition to retained earnings & $11,100 & $10,000 \\ \hline \end{tabular} FinancialRatios(Averages)CurrentratioRetumonassetsOperatingprofitmarginTotalassetturnoverDebtratioRetumonequityPeerCompanies1.8016.8%14.0%1.200.5018.0%
