Please help me with this study guide! I'm getting conflicting results with my friends.
1. (15 pts) With the following Income Statement find the following financial ratios: Income Statement - XYZ, Inc. - Jan 1 - Dec 31 Sales 800,000 Expenses Cost of Goods Sold 350,000 Gross Profit 450,000 Operating Expenses Salaries 180,000 Freight 15,000 Bad Debt 4,000 Utilities 22,000 Depreciation 14,000 Amortization 8,000 Insurance 12,000 Advertising 15,000 Interest 9,000 Miscellaneous 4,000 Total Oper Expenses 283,000 Operating Profit 167,000 Income Taxes 83,500 Net Income 83,500 a. (3 pts) Gross Margin b. (4 pts) Operating Margin c. (4 pts) EBIDTA d. (4 pts) Net Margin 2. (20 Points) Fill out the empty cells in the Income Statement below. This income statement is for a 1-year period. Here is what you know: The Gross Profit Margin is 50%. The Beginning Inventory and Ending Inventory are equal. The company has 10 inventory turns per year. Neglect interest and taxes. Income Statement (Jan 1 - Dec 31) Sales COGS Gross Profit Operating Expenses Net Profit 60,000 30,000 Find the values for: a. (5 pts) Average Inventory Level b. (5 pts) Gross Profit c. (5 pts) COGS d. (5 pts) Sales 3. (25 pts) You are beginning a business with an initial investment of $200,000. Show a balance sheet (printed out from MS Excel) at each of the steps below (one each for steps a, b, c, d): Each Balance sheet should look like: Balance Sheet Current Liabilities Current Assets Total Current Assets 0 Total Current Liabilities Fixed Assets Long Term Debt Total Fixed Assets Total Long Term Debt Total Liabilities Equity Total Net Worth (Equity) 0 Total Liabilities & Net Worth Total Assets (a) (5 pts) You put $200,000 into the bank for the business. You are the proprietor. (b) (5 pts) You buy a store for sales of your products. The building costs $90,000, which you pay for with a loan. You put $20,000 down and will have a 10 year loan for the balance of the principal. (c.) (5 pts) You buy $74,000 inventory for your store to sell. You pay for it with $30,000 in cash and $44,000 net 90 days. (d.) (5 pts) You sell $40,000 of your inventory for $60,000, with 12,000 of expenses and taxes? (e.) (5 pts) What is the net worth at after step (d)? 4. (40 pts) You are reviewing the following financial statements for ESI, Inc. Calculate the following financial ratios, parameters, etc. 100,000 Balance Sheet -ESI, Inc. - End Week 4 Current Assets Current Liabilities Cash 66,150 Short Term Debt 50,000 Accts Receivable 30,000 Accts Payable 65,000 Inventory 20,000 Total Current Assets 116,150 Total Current Liabilities 115,000 40,000 60,000 Fixed Assets Buildings Long Term Debt 150,000 Mortgage 100,000 Income Statement -ESI, Inc. - Week 1 thru 4 Sales Expenses Cost of Goods Sold Gross Profit Operating Expenses Salaries 15,000 Freight 1,000 Bad Debt 500 Utilities 2,000 Depreciation Amortization Insurance 1,200 Advertising 3,000 Interest 3,000 Miscellaneous 2.000 Total Oper Expenses Operating Profit Income Taxes Net Income Total Fixed Assets 150,000 Total Long Term Debt 100,000 Total Liabilities 215.000 Ifaulty Stock Retained Earnings 35,000 16,150 27,7001 32,300 16,150 16,150 Total Net Worth (Equity) 51,150 266,150 Total Liabilities & Net Worth 266,150 Total Assets a. (3 pts) Gross Margin b. (3 pts) Operating Margin c. (3 pts) Net Margin d. (3 pts) Current Ratio. (3 pts) What does this tell you about the health of this company? e. (3 pts) Debt/Equity Ratio (3 pts) What does this tell you about the health of this company? f. (3 pts) Return on Equity (3 pts) Does this look good or bad? g. (3 pts) Working Capital (3 pts) What does this tell you about the health of this company? h. (3 pts) Quick Ratio (4 pts) What does this tell you about the health of this company
