P & B Manufacturing P & B Manufacturing Comparative Balance Sheet Income Statement (dollars in millions) For Year Ended December 31 Ending Balance Beginning Balance (dollars in millions) Assets Current assets: Sales 4,450 Cash and cash equivalents 65 91 Cost of goods sold 3,550 Accounts Receivable 530 572 Gross Margin 900 Inventory 600 580 Selling and administrative expenses 820 Total current assets 1,195 1,243 Net operating income 80 Property, plant and equipment 1,719 1,656 Nonoperating items: Gain on sale of equipment 4 Less accumulated depreciation 640 480 Income before taxes 84 Net property, plant and equipment 1,079 1,176 Income taxes 29 Total assets 2,274 2,419 Net Income 55 Liabilities and Stockholders' Equity Current liabilities: Accounts payable 180 180 P & B Manufacturing also provided the following information: Accrued liabilities 94 105 1 The company sold equipment that had an original cost of $15 Income taxes payable 72 88 million and accumulated depreciation of $9 million. The cash Total current liabilities 346 373 proceeds from the sale were $11 million. The gain on the sale was Bonds payable 180 310 $4 million. Total liabilities 526 583 2 The company did not issue any new bonds during the year Stockholders' equity: Common stock 800 300 3 The company paid a cash dividend during the year Retained earnings 948 936 4 The company did not complete any common stock transactions Total stockholders' equity 1,748 1,736 during the year Total liabilities and stockholders' equity 2,274 2,419Required: 1. Using the indirect method, prepare a Statement of Cash Flows for the year 2. To help P & B Manufacturing assess its liquidity at the end of the year calculate the following: a. Current ratio b. Acid-test (quick) ratio 3. To help P & B Manufacturing assess its asset management calculate the following: a. Average collection period (assuming all sales are on account) b. Average sale period 4. To help P & B Manufacturing assess its debt management calculate the following: a. Debt-to-equity ratio at the end of the year b. Equity multiplier 5. To help P & B Manufacturing assess its profitability calculate the following a. Net profit margin percentage b. Return on equity 6. To help P & B Manufacturing assess its market performance, calculate the following (assume the par value of the company's common stock is $10 per share) a. Earnings per share b. Dividend payout ratioParts 1 thru 6b P & B Manufacturing Comparative Balance Sheet 1 Green boxes have drop down menu's to choose from (dollars in millions) P & B Manufacturing Ending Balance Beginning Balance Assets Statement of Cash Flows (indirect method) Current assets: For the Year Ended December 31 Cash and cash equivalents 65 91 Accounts Receivable 530 572 Operating Activities: Inventory 600 580 Net Income (starting point ) Total current assets 1,195 1,243 Property, plant and equipment 1,719 1,656 Adjustments to convert net income to cash basis: Less accumulated depreciation 640 480 Net property, plant and equipment 1,079 1, 176 Total assets 2,274 2,419 Liabilities and Stockholders' Equity Current liabilities: Accounts payable 180 180 Accrued liabilities 94 105 Income taxes payable 72 88 Total current liabilities 346 373 Bonds payable 180 310 Subtotal of Adjustments Total liabilities 526 683 Stockholders equity: Net cash provided by operating activities Common stock 800 800 Retained earnings 948 936 Investing Activities: Total stockholders' equity 1,748 1,736 Total liabilities and stockholders' equity 2,274 2,419 P & B Manufacturing Net cash used in investing activities Income Statement For Year Ended December 31 Financing Activities: (dollars in millions) Sales 4,450 Cost of goods sold 3,550 Net cash used in financing activities Gross Margin 900 Selling and administrative expenses 820 Net operating income 80 Nonoperating items: Gain on sale of equipment Beginning cash and cash equivalents Income before taxes 84 Ending cash and cash equivalents Income taxes 29 Net Income 55To assess the liquidity at the end of the year calculate Current Ratio and Acid-test (quick). Round Using the actual numbers (not cell references) provide the support calculations for your ratios in the area below. your answers to 2 decimal places - for example 5.67 For example 56.70 / 10 = 5.67 2a Calculate the Current Ratio 2b Calculate the Acid-test (quick) ratio To assess asset management calculate Average collection period and Average sale period. Assume 365 days in a year. Round your answers to 2 decimal places 3a Calculate Average collection period - assume all sales are on account 3b Calculate Average sale period - use 365 days in a year. To assess debt management calculate Debt-to-Equity ratio at the end of the year and Equity Multiplier. Round your calculations & answers to 2 decimal places 4a Calculate Debt-to-Equity ratio 4b Calculate Equity multiplier To assess profitability calculate Net Profit Margin Percentage and Return on Equity. Round your calculations & answers to 2 decimal place 5a Calculate Net profit margin percentag Both 5a and 5b are to be expressed as a percent. Research if you are unsure how to express a number as a percent. 5b Calculate Return on equity percentageTo assess market performance, calculate Earnings Per Share and Dividend Payout Ratio. Assume the par value of the company's common stock is $10 per share Round your calculations & answers to 2 decimal places 6a Calculate Earnings per share. Express in dollars and cents Calculate Dividend payout ratio - express in a percent. Assume the par value of the 6b company's common stock is $10 per share