Part 1. Prepare an income statement and classified balance sheet for the period ended Dec 31, 2020. The balance of inventory on Dec 31 is $30. The companys stock trades on the NASDAQ exchange for $75 per share. Dilbert is an L.L.C. and does not pay federal income taxes.

Dilbert Pharmaceuticals, Inc.
Trial Balance
December 31, 2020
(in Millions)
Cash	$8
Inventory (Jan. 1, 2020 bal.)	$10
Land	$15
Building	$135
Equipment	$55
Accounts Payables		$20
Wages Payable		$5
Notes Payable (Due in 7 Years)		$100
Common Stock		$50
Retained Earnings		$30
Dividends	$15
Sales		$150
Purchases	$40
Purchases Returns		$2
Purchases Discounts		$3
Freight In	$12
Selling Expenses	$35
R&D Expenses	$20
Loss from Natural Disaster	$15
	$360	$360

Instructions Part 2: Use the excel template provided by your teacher or prepare the financial statements needed in excel or Google Docs on your own. Once you have the financial statements prepared calculate the following ratios. Most of these have come up in class so far but, if not, use your textbook or Investopedia.com to look them up or ask your teacher. Calculate (1) Current Ratio; (2) Debt to Asset Ratio; Return on Assets Ratio, Return on Equity Ratio and the Price Earnings Ratio.

Once you have the ratios calculated, write a brief memo, addressed to me, that explains the results of your ratio analysis. Use a memo template found in Microsoft Word or something similar. Make sure to proof read your memo before you turn it in to me. It will be graded based on content and how professional looking it is. The memo doesnt have to be excessively long but it should explain your evaluation of Dilbert Pharmaceuticals, Inc.s liquidity, solvency and profitability. In addition, the memo should conclude with your opinion as to whether the companys stock is fairly valued or not and why you think that.

Dilbert has been in business since 1982. The company is located in Hot Springs, Arkansas and employs 2,400 people. The company sells pharmaceutical products in the USA, Mexico and Canada. The companys sales primarily come from three drugs used to treat various cancers and pain loss conditions. Sales and cash flows from operations have increased steadily since the company was founded averaging increases of at least 10% per year. The company operates in a highly competitive global industry and cant increase selling price on its products without losing significant sales volume and market share.

For the last two previous years, the current ratio was 1.20 and 1.35 and the debt to asset ratio was 45% and 48%. The industry average for these two ratios is 2.0 and 70%. For previous years, the ROA has been 15% and 18%. The industry average is 20%. For previous years, the ROE has been 35% and 38%. The industry average is 40%. For the other companies in Dilberts industry, the Price Earnings Ratio average is 50. For the S&P 500, public company stocks average PE at the time the financial statements are done is 20. That should be all the data you need to complete this assignment. Pick people you want to work with and turn it in on XXX XXXX. This assignment is meant to be fun and interesting so dont stress about it but use it to learn.

i) UPDATES AVAILABLE Updates for Office are ready to be ins B26 1 Phi Slamma Jammi, Inc. 2 Adjusted Trial Balance 3 December 31, 20xx 5 Cash 6 Accounts Receivable 7 Allowance for Bad Debts 8 Prepaid Rent 9 Inventory 10 Estimated Returns Inventory 11 Computers 12 Accumulated Depreciation 13 Unearned Consulting Revenue 14 Accounts Payable 15 Salaries Payable 16 Fed Income TX WH Payable 17 Social Security Taxes Payable 18 Medicare Taxes Payable 19 Dividends Payable 20 Refunds Payable 21 Notes Payable 22 Common Stock 23 PIC XOP CS 24 Retained Earnings 25 Treasury Stock 26 Consulting Revenues 27 Sales 28 COGS 29 Salaries Expense 30 Depreciation Expense 31 Rent Expense 32 Bad Debts Expense 33 Iotals 34 35 36 37