- Did our Accounts Payable policy change from the previous owners? If so, what was the change? Show how you know whether it changed or not.
- Is there a way to keep our Long-Term debt under $50,000 without receiving any more investor money? Using the Proforma 1 Balance Sheet you created in Part 1 as a starting point, create another proforma 2020 Income Statement and Balance Sheet (Proforma 2) to reflect changes to policy that would have an immediate impact on Working Capital enough to enable the Long-Term Debt to be less than $50,000. Make at least 3 changes to the management of our working capital processes and/or policies (do NOT make changes to the Income Statement UNLESS it has been impacted by the working capital process and/or policies). The proforma Income Statement and Balance Sheet should reflect what they would have looked like with your changes (Note that the both the Income Statement and Balance Sheet could change due to policy changes made).
- Describe the changes in processes and/or policies made and their impact on the Financial Statements.
- Analyze the Financial Statements and list 3 potential areas of improvement.
Chips Income Statement 2020 (Year 1) Pro- Forma 1 2020 (Year 1) Pro- Forma 2 2019 2020 (Year 1) Actual 1,182,139 $ 1,101,368 Revenue $ Material Cost of Goods Sold Labor Cost of Goods Sold Total Cost of Goods Sold Gross Margin i Gross Margin % $ $ $ $ 474,036 $ 173,828 $ 647,864 $ 534,275 $ 45.2% 444,094 182,624 626,718 474,650 43.1% Operating Expenses Lease Expense Utilities Expense Manager Salary Expense Manager Salary PT&B Expense 3 Hourly Wage Expense Hourly Wage PT&B Expense Marketing Expense Professional Services Expense e Office Supplies and Misc Supplies Expense $ $ $ $ $ $ $ $ $ 114,480 $ 39,222 $ 156,060 $ 48,376 $ 81,840 $ 5,074 $ 15,566 $ 29,633 $ 2,444 $ 108,756 40,399 120,000 37,198 83,477 5,176 18,497 36,478 2,983 Repairs and Maintenance Expense Insurance Expense Depreciation Expense Total Operating Expenses $ $ $ $ 8,497 $ 7,161 $ 13,390 $ 521,743 $ 12,479 7,598 13,390 486,430 Earnings Before Interest and Taxes $ 12,532 $ (11,780) Interest Expense Tax Expense Net Income Net Income % $ $ $ 11,254 $ 320 $ 958 $ 11,631 (5,853) (17,558) -1.6% 0.1% Chips Balance Sheet Current Assets Cash 136,497 Accounts Receivable $ $ $ $ 158,875 $ $ 17,055 $ 175,930 $ Inventory Total Current Assets 14,897 151,394 Equipment and Leasehold Improvements Accumulated Depreciation Tota Fixed Assets $ $ $ 133,896 $ (37,762) $ 96,134 $ 133,896 (51,152) 82,744 Total Assets $ 272,064 $ 234,138 Current Liabilities Accounts Payable Taxes Payable Total Current Liabilities $ $ $ 62,130 $ 320 $ 62,450 $ 12,167 (5,853) 6,314 Long-term Debt Total Liabilities $ $ 101,686 $ 164,136 $ 145,382 151,696 Stock Retained Earnings Total Equity $ $ $ 100,000 $ 7,928 $ 107,928 $ 100,000 (17,558) 82,442 Total Liabilities and Equity $ 272,064 $ 234,138 Chips Cookie Revenue 2019 2020 Boise Town Square Indvidual Units Box Units Total Cookies Cookie Prices Total Per Cookie $ 3.00 $ 3.00 $ 10.00 $ 2.50 43,543 23,074 135,839 40,497 21,983 128,429 Individual Box of 4 Individual Revenue Box Revenue Total Revenue $ 130,629 $ $ 230,740 $ $ 361,369 $ 121,491 219,830 341,321 Boise Spectrum Center Indvidual Units Box Units Total Cookies 47,437 26,908 155,069 43,483 24,974 143,379 Individual Revenue Box Revenue Total Revenue $ 142,311 $ $ 269,080 $ $ 411,391 $ 130,449 249,740 380,189 Vista Village Indvidual Units Box Units Total Cookies 45,983 27,143 154,555 42,446 25,252 143,454 Individual Revenue Box Revenue Total Revenue $ 137,949 $ $ 271,430 $ $ 409,379 $ 127,338 252,520 379,858 Total Indvidual Units Box Units Total Cookies 136,963 77,125 445,463 126,426 72,209 415,262 Individual Revenue Box Revenue Total Revenue $ 410,889 $ 379,278 $ 771,250 $ 722,090 $1,182,139 $ 1,101,368 Chips Income Statement 2020 (Year 1) Pro- Forma 1 2020 (Year 1) Pro- Forma 2 2019 2020 (Year 1) Actual 1,182,139 $ 1,101,368 Revenue $ Material Cost of Goods Sold Labor Cost of Goods Sold Total Cost of Goods Sold Gross Margin i Gross Margin % $ $ $ $ 474,036 $ 173,828 $ 647,864 $ 534,275 $ 45.2% 444,094 182,624 626,718 474,650 43.1% Operating Expenses Lease Expense Utilities Expense Manager Salary Expense Manager Salary PT&B Expense 3 Hourly Wage Expense Hourly Wage PT&B Expense Marketing Expense Professional Services Expense e Office Supplies and Misc Supplies Expense $ $ $ $ $ $ $ $ $ 114,480 $ 39,222 $ 156,060 $ 48,376 $ 81,840 $ 5,074 $ 15,566 $ 29,633 $ 2,444 $ 108,756 40,399 120,000 37,198 83,477 5,176 18,497 36,478 2,983 Repairs and Maintenance Expense Insurance Expense Depreciation Expense Total Operating Expenses $ $ $ $ 8,497 $ 7,161 $ 13,390 $ 521,743 $ 12,479 7,598 13,390 486,430 Earnings Before Interest and Taxes $ 12,532 $ (11,780) Interest Expense Tax Expense Net Income Net Income % $ $ $ 11,254 $ 320 $ 958 $ 11,631 (5,853) (17,558) -1.6% 0.1% Chips Balance Sheet Current Assets Cash 136,497 Accounts Receivable $ $ $ $ 158,875 $ $ 17,055 $ 175,930 $ Inventory Total Current Assets 14,897 151,394 Equipment and Leasehold Improvements Accumulated Depreciation Tota Fixed Assets $ $ $ 133,896 $ (37,762) $ 96,134 $ 133,896 (51,152) 82,744 Total Assets $ 272,064 $ 234,138 Current Liabilities Accounts Payable Taxes Payable Total Current Liabilities $ $ $ 62,130 $ 320 $ 62,450 $ 12,167 (5,853) 6,314 Long-term Debt Total Liabilities $ $ 101,686 $ 164,136 $ 145,382 151,696 Stock Retained Earnings Total Equity $ $ $ 100,000 $ 7,928 $ 107,928 $ 100,000 (17,558) 82,442 Total Liabilities and Equity $ 272,064 $ 234,138 Chips Cookie Revenue 2019 2020 Boise Town Square Indvidual Units Box Units Total Cookies Cookie Prices Total Per Cookie $ 3.00 $ 3.00 $ 10.00 $ 2.50 43,543 23,074 135,839 40,497 21,983 128,429 Individual Box of 4 Individual Revenue Box Revenue Total Revenue $ 130,629 $ $ 230,740 $ $ 361,369 $ 121,491 219,830 341,321 Boise Spectrum Center Indvidual Units Box Units Total Cookies 47,437 26,908 155,069 43,483 24,974 143,379 Individual Revenue Box Revenue Total Revenue $ 142,311 $ $ 269,080 $ $ 411,391 $ 130,449 249,740 380,189 Vista Village Indvidual Units Box Units Total Cookies 45,983 27,143 154,555 42,446 25,252 143,454 Individual Revenue Box Revenue Total Revenue $ 137,949 $ $ 271,430 $ $ 409,379 $ 127,338 252,520 379,858 Total Indvidual Units Box Units Total Cookies 136,963 77,125 445,463 126,426 72,209 415,262 Individual Revenue Box Revenue Total Revenue $ 410,889 $ 379,278 $ 771,250 $ 722,090 $1,182,139 $ 1,101,368
