Excelsor Corp is an organization that plans to enter into renewable energy. The Balance Sheet

and Income Statement is provided below. The company is planning to sell 10000D products with

each product priced at $18.35. It found that nearly

a) 1.5% of RM remains unused throughout the current process, 6.5% of planned products remain in process and 2% of Finished goods accrue a 7-period depreciation. The organization has been in operation since last 19 periods with 1.5% depreciation in each period that impacts negatively impacting the IT payable negatively. Its also observed that cash, ST investments, Other receivables, prepaid expenses and other assets from current asset section are equal to complete paid in capital and half of retained earnings by 25%, 10%, 15%, 10% and 40% respectively (The complete RE earned through Inc Stmt are evaluated equally as paid in capital and retained earnings). The rest of earnings are distributed equally among each of the Intangible Assets.

1) Prepare an Income Statement. (7)

Prepare a Balance Sheet. (3)

b) Due to changes in COGS values, suggest how the following issues change (6)

Current ratio

Quick Ratio

Inventory Turnover Ratio

2. The company has planned to enter into renewable energy and according to expert suggestion, its observed that only 36.5% of fixed asset changes would help them achieve a better milestone. The changes are 10% in Land improvements, 10% in Building improvements and rest in equipment by decrease. The changes are accompanied into St loans payable, LT debts payable, Accrued Liabilities Utilities expense and Administrative expense with equal probabilities. This helps increase the sales by 12% while effecting the COGS to be increased only in equal proportion to sales by FA changes.

a) Based on the above changes suggest the following (5) 1) Fixed Asset to Total Liabilities Value Operating Cash Flow Ratio (Based on New CFFA)

b) The organization has showed that among the current liabilities ST Loans payable, LT debts payable and accrued liabilities remain as the interest payments. Suggest on the basis of new Operating Income (4)

Interest Coverage ratio (Based on New CFFA) Debt Service Coverage ratio (Based on New CFFA)

Additional Question

c) Its also observed that due to entry market challenge, nearly 30% of sales are accompanied by credit sales. During the operating cycle the AR hence increases by 30% The adjustment is occupied by accrued revenues and deferred revenues. Suggest (3)

Receivables Turnover Ratio

Asset Turnover Ratio

Important Ratios Current ratio = Current assets / Current liabilities Acid-test ratio = Current assets Inventories / Current liabilities Operating cash flow ratio = Operating cash flow/ Current liabilities Debt service coverage ratio = Operating income/Total debt service Inventory turnover ratio = Cost of goods sold / Average inventory Receivables turnover ratio = Net credit sales/ Average accounts recelvable Asset turnover ratio = Netsales/ Average total assets Important Ratios Current ratio = Current assets / Current liabilities Acid-test ratio = Current assets Inventories / Current liabilities Operating cash flow ratio = Operating cash flow/ Current liabilities Debt service coverage ratio = Operating income/Total debt service Inventory turnover ratio = Cost of goods sold / Average inventory Receivables turnover ratio = Net credit sales/ Average accounts recelvable Asset turnover ratio = Netsales/ Average total assets