Math Revealed!

Financial Analysis Project

Using the data from the Balance Sheet at $\frac{2}{29}$ and the Profit & Loss

$\frac{1}{1}-\frac{2}{29}$ statement, calculate the financial ratios listed on the attached page.

If both current assets and current liabilities were increased by $$10,000,$ would the

current ratio increase, decrease, or stay the same?

Is Math Revealed! more or less solvent than a similar operation with a $50\%$ debt to

assets ratio?

By how much would you expect the gross profit from product sales to increase

$($in dollars$)$ if income from product sales increased by $$5,000?$ Assume the increase

came solely from an increase in the number of units sold.

HINT: Only consider gross profit from product sales. Do not consider revenues

from services. Sales discounts were given on service revenue.$)$

$($Round to the nearest whole dollar amount.$)$

Which current asset does Math Revealed! appear to be doing a better job of

managing $-$ Accounts Receivable or Inventory?

Math Revealed! didn't start selling products until $2/1.$ Did that fact affect the

the inventory turnover ratio?

If so$,$ how?

Math Revealed!

Financial Ratios

Answers

Liquidity

Current Ratio

Quick Ratio

Working Capital Ratio

Activity

A$/$R Turnover

Inventory Turnover

Days in A$/$R

Days in Inventory

Solvency

Debt to Assets

Debt to Equity

Profitability

Gross Profit Margin

Net Profit Margin

Return on Equity

NOTE: Assume credit sales for the period

totaled $$12,334$

HINT $1$: You're using the operating data $($P&L data$)$ for two months. To get an annual rate, you'll need to

multiply the appropriate P&L amounts by six $(6).$

HINT $2$: Since this is the first year of operations, go ahead and use the ending $(\frac{2}{28})$ balances for

asset accounts instead of averages.