Part One Instructions The financial information for the past two years (2018 and 2019) is provided. Using a spreadsheet application, such as Microsoft Excel, and the information from the previous years, provide the following: 1. Prepare a statement of Cash Flows for the current year using the indirect method. 2. Using horizontal analysis, prepare a Comparative Balance Sheet. 3. Using vertical analysis, prepare an Income Statement. 4. Using the textbook, calculate the ratios set out below: a. Working Capital both years b. Current Ratio both years Quick ratio both years d. Accounts Receivable Turnover 2019 e Number of Days Sales in Receivables 2019 (Company policy states 30 days in receivables) f. Inventory Turnover 2019 8 Number of Days Sales in Inventory 2019 (Company policy states 50 days to turn over inventory) h. Ratio of Liabilities to Stockholders' Equity 2018 and 2019 i. Return on Total Assets 2019 1. Return on Stockholders' Equity 2019 k. Earnings Per Share 2018 and 2019 The financial statements provided in this practice set can also be downloaded from Blackboard. An example of a Statement of Cash Flow has been provided at the end of the Practice Set. Download the Excel files (Income Statement and Balance Sheet) from Blackboard and add a column and calculate the ratios for the vertical and horizontal analysis. 5. Acting as an accounting advisor to the firm, prepare a memo in which you analyze the financial statements you prepared in step two and prepare an analysis of the company's financial position. Identify two strengths and two weaknesses in the company. Make two 2 Page IETY recommendations to improve the company's financial position. Be specific in each of the recommendations and use the ratios to support your analysis. The length should be no more than three paragraphs; one for strengths, one for weaknesses and one for recommendations. 6. Blackboard Instructions a. Memo analyzing the company's strengths and weaknesses with two recommendations In Blackboard you will write a memo using ratios to analyze the strengths and weaknesses of the company. Make sure there are no spelling. grammatical, or punctuation errors b. Add information concerning numbers here and enter Blackboard as specified below C. When the answer is in units enter the number as is (See example below) i. 280 d. When the answer is for ratios (ie. Current ratio) and has a decimal take the decimal out two decimal spaces (See example below) i. 280.89 e. When ratios are in days/times take out to two decimal places and write days or times after the number (See example below) 1. 280.96 days or times f. When the answer is in dollars ALWAYS include a dollar sign and cents even if the cents is zero add.00 (See example below) 1. $280.00 or $3,800.00 ACCOUNTING SETY Robust Robots, Inc Comparative Balance Sheet December 31, 2019 and 2018 Current Assets Accounts Receivable.net 150,000 135.000 9.700 30.000 389.700 80,000 100,000 70.000 500 10.000 260.500 Prepaid insurance Terol Current Assets Property, plant and Equipment: Less: Accumulated Depreciation - Equipment Total Property, plant, and Equipment Total Assets 500 000 (80,000) 420,000 809,700 240,000 190.000 150,000 410,500 4 Pa ACCOUNTING DOCTETY 2018 2019 5 Current Laboties Accounts Payable Linearned Revenue Salaries Payable Federal income Taxes Payable Total Current L es 150,000 40,000 40.000 10,000 240,000 $ 40,000 1100 50.000 -10, 30,000 10 10,000 130,0001 0 5 $ $ Long Term Liabilities Note Payable Total Long Term Liabilities Total Liabilities $ $ $ 130.000 130,000 370,000 $ 130,000 2 $ 100.000 Stockholders' Equity Common Stock, SIO Par Pald-in Capital in Excess of Par Retained Earnings Tota Stockholders' Equity Total Liabilities and Stockholders' Equity 170.000 43,700 226.000 439,700 309,700 $ $ $ 180,500 280,500 410,500 $ 1 $ S ETY Robust Robots, Inc. Comparative Statement of income The Year Ended December 31, 2019 and 2018 2019 700,000 524100 175,700 $ $ $ 600,000 420.000 180,000 S $ $ cost of Goods Sold Gross Margin Operating Expenses Salaries and Wages Expense Rent Expense Depreciation Expens I foto voting Expenses Income from Operations Loss on Sale of Equipment Interest Expense Increase (Decrease in Operating Income Income before Taxes Federal Income Taxes Net Income 47,290 20.256 20,000 82,546 88,154 (5.213) (3.656) 8,869) $ $ S 100.000 20.000 10,000 130.000 50,000 $ $ 5 5.000) (5,000) S $ 79,285 (23.786) 55,500 $ S $ 45.000 (13 500) 31,500 ACCOUNTING SOCIETY ve Statement of Retained Earnings Robust Rabats, Inc. Comparative statement of Retained Earnings For the Years Ended December 31, 2019 and 2018 2019 Retained Earnings, Beginning $ 180,500 S 2018 176,000 Ner Income $ 55,500 S 31,500 Less: Dividends $ 10,000 $ 27,000 Retained Earnings, End of Year $ 226,000 $ 180,500 1. Equipment with a cost of $90,000 on which depreciation has been recorded, was sold for cash. Additional equipment was purchased for cash and a long-term note payable. 2. Stock was issued for cash. 3. The dividends were paid in cash