Page 20. 20 2020 S000 195.00 2.000 2019 2019 Current Assets Cussent liabilities Cash 500 300000 Accounts Payable 30000 Marketable securities 2000.0 10000 Short term loan Accounts peceivables 60000 S0000 Inventory 30000 10000 Other current assets 10000 Total Total Current Current Assets 1620000 410000 Liabilities 40000 50000 18 500 Information for the year 2019 Marketable Securities 20,000.00 Accounts Receivable 60,000.00 Inventory 30,000.00 Number of shares outstanding 120,000.00 Other current assets 10,000.00 Propert, Plant and equipment 400,000.00 Machinery 80,000.00 Furniture 15,000.00 Vehicles 100,000.00 Paid in capital in excess of par value 600,000.00 Par value of stock 1.00 Notes payable 30,000.00 Accounts payable 30,000.00 Long term loan 89,000.00 Short term loan 20,000.00 Dividends 18,900.00 Cash 500,000.00 Accumulated depreciation 20,000.00 Sales 700,000.00 Depreciation expense 5,000.00 Selling expense 15,000.00 Cost of goods sold 450,000.00 Research and development expense 30,000.00 General and administrative expense 20,000.00 Interest expense 16,000.00 Tax rate 35% Utilities expense 30,000.00 Beginning balance of retained earnings 237,800.00 Information for the year 2020 Marketable Securities 10,000.00 Accounts Receivable 50,000.00 Inventory 10,000.00 Number of shares outstanding 100,000.00 Other current assets 40,000.00 Propert, Plant and equipment 381,000.00 Machinery 60,000.00 Furniture 70,000.00 Vehicles 120,000.00 Paid in capital in excess of par value 420.000.00 Par value of stock 1.00 Notes payable 30,000.00 Accounts payable 5,000.00 Long term loan 60,000.00 Short term loan 13,500.00 Dividends 16,000.00 Cash 300,000.00 Accumulated depreciation 25,000.00 Sales 900,000.00 Depreciation expense 5,000.00 Selling expense 20,000.00 Cost of goods sold 600,000.00 Research and development expense 30,000.00 General and administrative expense 40,000.00 Interest expense 10,000.00 Tax rate 35% Utilities expense 45,000.00 Beginning balance of retained earnings Income Statement For the year ended December 31, Sales Cost Of Goods Sold Gross profit Less Operating Expenses Depreciation Expense Selling Expense Research And Development Expense General And Administrative Expense Utilities Expense Total operating expenses Operating income Interest Expense Income before income tax Income tax expense (134,000.00*35%; 150,000.00*35% Net income Notes: Retained earnings = Retained earnings in the beginning + net income - dividend 2019 = 237800+87100-18900 = 306,000 2020 = 306,000+97500-16000 = 387,500 Cash flow statement For the year ended December 31, 2020 Cash flow from operating activities Net income Adjustments to reconcile net income to operating cash fl Depreciation Expense Decrease in inventory (30000-10000) Decrease in Accounts Receivable (60000-50000) Increase in Other Current Assets (10000-40000) Decrease in Accounts payable (30000-5000) Cash flow provided by operating activities Cash flow from Investing activities Cash used to purchase Furniture (70000-15000) Cash used to purchase Vehicles (120,000-100000) Cash from sale of Property, Plant And Equipment (4000 Cash from sale of Machinery (80000-60000) Cash flow used by Investing activities Cash flow from financing activities Repayment of Short Term Loan (20000-13500) Repayment of Long Term Loan (89000-60000) Repurchase of Common Stock (120000+600000-100000 Dividend paid Cash flow used by financing activities Net decrease in cash and cash equivalents Cash and cash equivalents in the beginning of the year Cash and cash equivalents at the end of year (300000+10 3. Calculate the financial ratios for the company in 2019 and 2020. (2 marks) Note: Purchases were %70 of the cost of goods sold in both years. 20191 2020 Financial Ratios Current ratio Quick ratio Inventory turnover Average age of inventory Average collection period Average payment period Asset turnover Debt ratio Debt to equity ratio Times interest earned ratio Gross profit margin Operating profit margin Net profit margin ROA ROE Page 20. 20 2020 S000 195.00 2.000 2019 2019 Current Assets Cussent liabilities Cash 500 300000 Accounts Payable 30000 Marketable securities 2000.0 10000 Short term loan Accounts peceivables 60000 S0000 Inventory 30000 10000 Other current assets 10000 Total Total Current Current Assets 1620000 410000 Liabilities 40000 50000 18 500 Information for the year 2019 Marketable Securities 20,000.00 Accounts Receivable 60,000.00 Inventory 30,000.00 Number of shares outstanding 120,000.00 Other current assets 10,000.00 Propert, Plant and equipment 400,000.00 Machinery 80,000.00 Furniture 15,000.00 Vehicles 100,000.00 Paid in capital in excess of par value 600,000.00 Par value of stock 1.00 Notes payable 30,000.00 Accounts payable 30,000.00 Long term loan 89,000.00 Short term loan 20,000.00 Dividends 18,900.00 Cash 500,000.00 Accumulated depreciation 20,000.00 Sales 700,000.00 Depreciation expense 5,000.00 Selling expense 15,000.00 Cost of goods sold 450,000.00 Research and development expense 30,000.00 General and administrative expense 20,000.00 Interest expense 16,000.00 Tax rate 35% Utilities expense 30,000.00 Beginning balance of retained earnings 237,800.00 Information for the year 2020 Marketable Securities 10,000.00 Accounts Receivable 50,000.00 Inventory 10,000.00 Number of shares outstanding 100,000.00 Other current assets 40,000.00 Propert, Plant and equipment 381,000.00 Machinery 60,000.00 Furniture 70,000.00 Vehicles 120,000.00 Paid in capital in excess of par value 420.000.00 Par value of stock 1.00 Notes payable 30,000.00 Accounts payable 5,000.00 Long term loan 60,000.00 Short term loan 13,500.00 Dividends 16,000.00 Cash 300,000.00 Accumulated depreciation 25,000.00 Sales 900,000.00 Depreciation expense 5,000.00 Selling expense 20,000.00 Cost of goods sold 600,000.00 Research and development expense 30,000.00 General and administrative expense 40,000.00 Interest expense 10,000.00 Tax rate 35% Utilities expense 45,000.00 Beginning balance of retained earnings Income Statement For the year ended December 31, Sales Cost Of Goods Sold Gross profit Less Operating Expenses Depreciation Expense Selling Expense Research And Development Expense General And Administrative Expense Utilities Expense Total operating expenses Operating income Interest Expense Income before income tax Income tax expense (134,000.00*35%; 150,000.00*35% Net income Notes: Retained earnings = Retained earnings in the beginning + net income - dividend 2019 = 237800+87100-18900 = 306,000 2020 = 306,000+97500-16000 = 387,500 Cash flow statement For the year ended December 31, 2020 Cash flow from operating activities Net income Adjustments to reconcile net income to operating cash fl Depreciation Expense Decrease in inventory (30000-10000) Decrease in Accounts Receivable (60000-50000) Increase in Other Current Assets (10000-40000) Decrease in Accounts payable (30000-5000) Cash flow provided by operating activities Cash flow from Investing activities Cash used to purchase Furniture (70000-15000) Cash used to purchase Vehicles (120,000-100000) Cash from sale of Property, Plant And Equipment (4000 Cash from sale of Machinery (80000-60000) Cash flow used by Investing activities Cash flow from financing activities Repayment of Short Term Loan (20000-13500) Repayment of Long Term Loan (89000-60000) Repurchase of Common Stock (120000+600000-100000 Dividend paid Cash flow used by financing activities Net decrease in cash and cash equivalents Cash and cash equivalents in the beginning of the year Cash and cash equivalents at the end of year (300000+10 3. Calculate the financial ratios for the company in 2019 and 2020. (2 marks) Note: Purchases were %70 of the cost of goods sold in both years. 20191 2020 Financial Ratios Current ratio Quick ratio Inventory turnover Average age of inventory Average collection period Average payment period Asset turnover Debt ratio Debt to equity ratio Times interest earned ratio Gross profit margin Operating profit margin Net profit margin ROA ROE