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I need help Assume that sales in this year will increase by 30 % with the cost of goods sold and operating expenses increasing proportionally
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Assume that sales in this year will increase by 30 % with the cost of goods sold and operating expenses increasing proportionally the rest remaining the same. Assume also that all current asset and all current liabilities only will increase proportionally to sales. Redo a balance sheet and an income statement with the changes and recompute the following ratios.
working capital,current ratio, acid test ratio, average collection of receivable,inventory turn over , ROA,ROE, Debt to equity, Number of times interest earned
ASSETS Current assets THIS YEAR LAST YEAR Cash Marketable securities Account receivable net Inventory Prepaid expenses 70 0 480 950 20 150 18 300 600 Total current assets Plant and equipment net TOTAL ASSETS 1520 1480 3000 1090 1370 2460 LIABILITIES AND STOCKHOLDERS EQUITY LIABILITIES Current liabilities 800 600 430 600 Bond payable 12% Total liabilities STOCKHOLDERS EQUITY 1400 1030 Preferred stock $25 par 8% Common stock $10 par Retained earnings 250 500 850 250 500 680 1600 1430 Total stockholder equity TOTAL LIABILITIES AND 2460 3000 STOCHOLDER EQUITY tatement Sales Less cost of goods sold THIS YEAR LAST YEAR 5000 3875 1125 653 Gross Margin 4350 3450 900 Less selling and administrative expenses 548 Net operating income Less interest expenses Net income before taxes Less income taxes (30%) 352 72 280 84 472 72 400 x 120 196 Net income 280 Dividend paid Preferred dividends Common dividends 20 90 20 75 95 110 Total dividends paid 170 680 101 579 Net income retained Retained earnings beginning of year 680 850 Retained earnings end of the year During the past year the company has expanded the number of catering supply lines it carries to stimulate sales and increase profits. Sales are currently 2/10 net 30. All sales are on accounts. fium in the catering supply industryStep by Step Solution
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