Instructions: Due date: December 17th 2020, by 3:00 pm. This is a group project every 5 student together. You can choose your partner by yourself. - Submit a soft copy of the answers to the four questions below via Retaj. This project is worth 15% of your final grade. Suppose you are interested in evaluating Ashmont Cycles Corporation. Given the corporation's income statement and balance sheet, answer the following questions: 1. Calculate the Ashmont Cycles Corporation financial ratios for the years 2019 and 2020. (6 marks) 2019 2020 Financial ratio Current ratio Inventory tumover Average collection period Totalasset tamover Debt ratio Debt to equity ratio Times interest eamed ratio Gross profit margin Operating profit margin Net profit margin Retum on Assets(ROA) Retum on equity (ROE) 2. Analyze the overall financial situation from a time-series viewpoint. Break your analysis into an evaluation of the firm's liquidity, activity, debt, and profitability. (2 marks) 3. Prepare the cash flow statement for Ashmont Cycles Corporation for the year ended December 31st 2020 using the indirect method. (4 marks) 4. Ashmont Cycles Corporation estimates its sales for the 2021 financial year will be $500,000. No new borrowing was obtained and therefore, the interest expense will remain unchanged $1,200 during 2021. Compile the Pro forma Income statement for Ashmont Cycles Corporation for the year 2021 using percent of sales method. (3marks) Ashmont Cyclos Balance Sheet As of December 31, 2019 and 2020 2019 2020 Assets Cash 8,000 3,368 Accounts receivable 2,500 2,200 Inventory 65,000 71,500 Prepaid expenses 1,500 1,800 Other current assets 500 600 Total current assets 77,500 79,468 Property, plant, and equipment 12,000 17,400 Accumulated depreciation -2.400 -3.480 Net property, plant, and equipment 9,600 13,920 Total Assets $ 87,100 $ 93,388 Liabilities Accounts payable 3,000 3,200 Line of credit 10,000 10,000 Current portion of long-term debt 4,000 4,000 Accrued expenses 1.100 1.100 Total Current Liabilities 18,100 18,300 Long-term debt 16.000 12.000 Total Liabilities $ 34,100 $ 30,300 Owner's Equity Contributed capital 50,000 50,000 Retained earnings 3.000 13.088 Total Owner's Equity $ 53,000 $ 63,088 Ashmont Cycles Income Statement For the year ended December 31, 2019 and 2020 2019 2020 Sales $155,000 $205,000 Cost of goods sold Gross Profit 70,000 99,000 Operating Expense: Selling, general and administrative expenses ### Utilities expense -5,000 -6,960 Rent expense Depreciation and amortization -1.080 -1.080 Total operating expenses Operating Income 13,920 16,720 Interest expense -1.200 -1 200 Income before Income Taxes 12,720 15,520 Income taxes (35%) -4.452 -5,432 Net Income $8,268 $10,088 Ashmont Cycles Income Statement For the year ended December 31, 2019 and 2020 2019 2020 Sales $155,000 $205,000 Cost of goods sold Gross Profit 70,000 99,000 Operating Expense: Selling, general and administrative expense Utilities expense Rent expense Depreciation and amortization Total operating expenses Operating Income 13,920 16,720 interest expense Income before Income Taxes 12,720 15,520 Income taxes (35%) Net Income $8,268 $10,088 Instructions: Due date: December 17th 2020, by 3:00 pm. This is a group project every 5 student together. You can choose your partner by yourself. - Submit a soft copy of the answers to the four questions below via Retaj. This project is worth 15% of your final grade. Suppose you are interested in evaluating Ashmont Cycles Corporation. Given the corporation's income statement and balance sheet, answer the following questions: 1. Calculate the Ashmont Cycles Corporation financial ratios for the years 2019 and 2020. (6 marks) 2019 2020 Financial ratio Current ratio Inventory tumover Average collection period Totalasset tamover Debt ratio Debt to equity ratio Times interest eamed ratio Gross profit margin Operating profit margin Net profit margin Retum on Assets(ROA) Retum on equity (ROE) 2. Analyze the overall financial situation from a time-series viewpoint. Break your analysis into an evaluation of the firm's liquidity, activity, debt, and profitability. (2 marks) 3. Prepare the cash flow statement for Ashmont Cycles Corporation for the year ended December 31st 2020 using the indirect method. (4 marks) 4. Ashmont Cycles Corporation estimates its sales for the 2021 financial year will be $500,000. No new borrowing was obtained and therefore, the interest expense will remain unchanged $1,200 during 2021. Compile the Pro forma Income statement for Ashmont Cycles Corporation for the year 2021 using percent of sales method. (3marks) Ashmont Cyclos Balance Sheet As of December 31, 2019 and 2020 2019 2020 Assets Cash 8,000 3,368 Accounts receivable 2,500 2,200 Inventory 65,000 71,500 Prepaid expenses 1,500 1,800 Other current assets 500 600 Total current assets 77,500 79,468 Property, plant, and equipment 12,000 17,400 Accumulated depreciation -2.400 -3.480 Net property, plant, and equipment 9,600 13,920 Total Assets $ 87,100 $ 93,388 Liabilities Accounts payable 3,000 3,200 Line of credit 10,000 10,000 Current portion of long-term debt 4,000 4,000 Accrued expenses 1.100 1.100 Total Current Liabilities 18,100 18,300 Long-term debt 16.000 12.000 Total Liabilities $ 34,100 $ 30,300 Owner's Equity Contributed capital 50,000 50,000 Retained earnings 3.000 13.088 Total Owner's Equity $ 53,000 $ 63,088 Ashmont Cycles Income Statement For the year ended December 31, 2019 and 2020 2019 2020 Sales $155,000 $205,000 Cost of goods sold Gross Profit 70,000 99,000 Operating Expense: Selling, general and administrative expenses ### Utilities expense -5,000 -6,960 Rent expense Depreciation and amortization -1.080 -1.080 Total operating expenses Operating Income 13,920 16,720 Interest expense -1.200 -1 200 Income before Income Taxes 12,720 15,520 Income taxes (35%) -4.452 -5,432 Net Income $8,268 $10,088 Ashmont Cycles Income Statement For the year ended December 31, 2019 and 2020 2019 2020 Sales $155,000 $205,000 Cost of goods sold Gross Profit 70,000 99,000 Operating Expense: Selling, general and administrative expense Utilities expense Rent expense Depreciation and amortization Total operating expenses Operating Income 13,920 16,720 interest expense Income before Income Taxes 12,720 15,520 Income taxes (35%) Net Income $8,268 $10,088