December 31, 2019 December 31 2019 2018 Current Assets: Cash and cash equivalents Trading securities (at fair value) Accounts receivable Inventory (at lower of cost or market) Total current assets $ 50,000 75,000 300,000 290,000 715,000 $ 35,000 65,000 290,000 275,000 665,000 350,000 300,000 Investments available-for-sale (at fair value) Fixed Assets: Property, plant, and equipment (at cost) Less: Accumulated depreciation 1,900,000 (385,000) 1,515,000 1,800,000 (350,000) 1.450,000 35,000 35,000 $2,615,000 $2,450,000 Goodwill Total assets Current Liabilities: Accounts payable Notes payable Accrued and other liabilities Total current liabilities $ 150,000 325,000 220,000 695,000 $ 125,000 375,000 200,000 700,000 Long-term Debt: Bonds and notes payable Total liabilities 650,000 600,000 1,345,000 1,300,000 Stockholders' Equity: Common stock (100,000 shares outstanding) Additional paid-in capital Retained earnings Total equity Total liabilities and equity 500,000 350,000 420,000 1,270,000 500,000 350,000 300,000 1,150,000 $2,615,000 $2,450,000 December 31, 2019 Sales Cost of goods sold $1,800,000 (1,000,000) Gross profit Operating expenses Interest expense 800,000 (486,970) (10,000) Net income before income taxes Income taxes (34%) Net income after income taxes 303,030 (103,030) $ 200,000 Earnings per share Operating cash flows Dividends for the year Market price per share $2 $255,000 $0.80 per share $12 Explain, apply and analyze the results of financial ratios: 1. Current ratio (Working capital ratio) = Current assets /Current liabilities 2. Acid - test ratio (Quick ratio) = Cash equivalents + Marketable securities + Net receivables /Current liabilities 3. Accounts receivable turnover = Net credit sales /Average net receivables 4. Inventory turnover = Cost of goods sold/ Average inventory 5. ) Total assets turnover = Net sales/ Average total assets 6. Accounts payable turnover = Cost of goods sold /Average accounts payable 7. Net operating margin in percentage = Net operating income /Net sales 8. ) Return on investment = Net income + Interest expense (1-Tax rate)/Average (long term liabilities + Equity) 9. Debt/Equity = Total liabilities/Common stockholders^ equity