In order to reinforce our F/S analysis lessons, each group will prepare information about various financial statement metrics. For each metric below, each group needs to prepare the following: (1) Calculate the metric for Pacioli Wholesale Corporation for 2018. Show your work. (2) Provide a description of what the metric is designed to tell us. What, if anything, does this year's value tell us about Pacioli? (3) Given our understanding of businesses, why is this information important? How does it fit into the overall puzzle? Metric 1: % change in Revenue Metric 2: Gross profit margin Metric 3: ROE Metric 4: Free cash flow Metric 5: Inventory turnover Metric 6: A/R turnover ASSETS Current Assets Cash Marketable Securities Accounts Receivable, Net of Uncollectible Accounts Inventory Prepaid Expenses Total Current Assets Fixed Assets Buildings and Equipment Less Accumulated Depreciation Net Buildings and Equipment Land Total Fixed Assets Goodwill TOTAL ASSETS EXHIBIT 22-1 Pacioli Wholesale Corporation Statement of Financial Position As of June 30 2018 and June 30, 2017 2018 2017 2018 2017 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities $ 8.000 $ 7.000 Wages Payable $ 3.000 $2.000 12.000 9,000 Accounts Payable 29,000 25,000 Taxes Payable 15.000 12.000 22,000 30,000 Total Current Liabilities $ 47,000 $. 39.000 49,000 40,000 Long-Term Liabilities 3.000 2.000 Mortgage Payable $ 45,000 $50,000 $94.000 $ 88,000 Bond Payable 100,000 100,000 Deferred Taxes 39.000 35.000 $150,000 $120,000 Total Long-Term Liabilities $184.000 $185.000 Stockholders' Equity 40.000 30.000 Common Stock, $1 Par. 1000 Shares $1,000 $1,000 Common Stock Excess over Par 24,000 24,000 $110,000 $90,000 Preferred Stock, 10%, $100 Par, 50.000 50.000 100 Shares 10,000 10,000 $160.000 $140.000 Retained Earnings 33.000 19.000 $ 45.000 $50.000 Total Stockholders' Equity $. 68.000 $54.000 TOTAL LIABILITIES & $299.000 $278,000 STOCKHOLDERS' EQUITY $299,000 $278.000 The accompanying notes are an integral part of these statements. EXHIBIT 22-2 Pacioli Wholesale Corporation Income Statement and Analysis of Retained Earnings For the Years Ending June 30, 2018 and June 30, 2017 2018 2017 Sales $297,000 $246,000 Less Cost of Goods Sold 162,000 143,000 Gross Profit $135,000 $103,000 Operating Expenses Selling Expenses $30,000 $25,000 General Expenses 12,000 10,000 Administrative Expenses 49,000 40,000 Total Operating Expenses 91,000 75,000 Operating Income $ 44,000 $ 28,000 Interest Expense 10,000 Income Before Taxes $ 32,000 $ 18,000 Income Taxes 13,000 7,000 Net Income $ 19,000 $ 11,000 Earnings Per Share Common $ 18.00 $ 10.00 Less Dividends 2018 and 2017 5,000 3,000 Addition to Retained Earnings $ 14,000 $ 8,000 Retained Earnings July 1, 2017 and 2016 19,000 11,000 Retained Earnings June 30, 2018 and 2017 $ 33,000 $ 19,000 The accompanying notes are an integral part of these statements. 12,000 8,000 EXHIBIT 22-3 Pacioli Wholesale Corporation Statement of Cash Flows For the Years Ending June 30, 2018 and June 30, 2017 2018 2017 Cash Flows from Operating Activities Net Income $ 19,000 $11,000 Add Expenses Not Requiring Cash: Depreciation 10,000 8,000 Impairment of Goodwill 5,000 0 Increase in Taxes Payable and Deferred Taxes 7,000 Other Adjustments: Add Reduction in Accounts Receivable 8,000 1,000 Add Increase in Wages Payable 1,000 0 Add Increase in Accounts Payable 4,000 0 Subtract Decrease in Accounts Payable 0 (3.000) Subtract Increase in Inventory (9,000) (2,000) Subtract Increase in Prepaid Expenses (1,000) 0 Net Cash from Operating Activities $ 44,000 $ 23,000 Cash Flows from Investing Activities Increase in Marketable Securities $ (3,000) Sale of Fixed Assets 0 $ 2,000 Purchase of New Equipment (30,000) (20,000) Net Cash Used for Investing Activities $(33,000 ) $(18,000)
