Question
Imagine that your friend Joe decides to create a corporation, Joe Ltd, and you lend him 20000 CHF to start his business (loan for 10
Imagine that your friend Joe decides to create a corporation, Joe Ltd, and you lend him 20000 CHF to start his business (loan for 10 years, interest rate 6%, constant reimbursement). Joe invests 20000 of his own money as well.
Joe Ltd uses the funds to purchase 4 machines @ 10000 CHF each that produce umbrellas (depreciated over 5 years).
Joe Ltd sells 10000 umbrellas the first year (at CHF 4.20 each) with variable costs (COGS) of 50% and functional expenses of CHF 7000.
At the end of the year:
What are Joe Ltds assets? Liabilities? Equity?
What are his revenues and expenses (assume tax is 25% and is paid immediately)?
What is his cash situation?
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