Q5] The financial statements of Robyn's Boutique, which designs and retails children's clothes are as follows: Income Statement for the year ended December 31, 2020 (Amount in *' 00) Sales Revenue 11,00,000 Cost of merchandise sold (7,10,000) Gross Profit 3,90,000 Operating expenses: Depreciation expense 23,500 Patent amortization 7,000 Other Operating expenses 196,000 Total Operating Expenses (2,26,500) Income from operations 1,63,500 Other Income: Gain on sale of Investments 11,000 Other expense: Interest expense (26,000) (15,000) Income before Income Tax 1,48,500 Income tax expense (50,000) Net Income 98,500 Comparative Balance sheets (Amount in *' 00) 31/12/2020 31/12/2019 Assets Cash 140,350 95,900 Accounts Receivable (net) 95,300 102,300 Inventory 165,200 157,900 Prepaid Expense 6,240 5,860 Investments (long-term) 35,700 84,700 Land 75,000 90,000 Property & Equipment: Buildings 375,000 260,000 Accumulated depreciation (Buildings) (71,300) (58,300) Machinery & Equipment 428,300 428,300 Acc. Depreciation (Mach. & Equip) (148,500) (138,000) Patents 58,000 65,000 Total Assets 11,59,290 10,93,660 Liabilities & Stockholders' Equity Accounts Payable 43,500 46,700 Accrued Operating Expenses 14,000 12,500 Income tax payable 7,900 8,400 Dividends Payable 14,000 10,000 Mortgage Notes Payable, due 2020 40,000 Bonds Payable 150,000 250,000 Capital stock, * 30 par 450,000 375,000 Excess of issue price over par-capital stock 66,250 41,250 Retained earnings 373,640 349,810 Total Liabilities & Stockholders' Equity 11,59,290 10,93,660 Additional Information (Amount in *'00): (1) Land costing 15,000 was sold for 15,00,000 during the period; (2) A mortgage note was issued for 40,000; (3) A building costing 115,000 was constructed; (4) 2,50,000 shares of common stock were issued at 140 in exchange for the bonds payable amount in * 00 to be considered); (5) Cash dividends declared were *74,670. Required: (a) Prepare Common-size Statement of Balance Sheet for 2019 and 2020 and analyze the performance of Robyn's Boutique during the period. [10 marks] (b) Calculate the duration of Operating Cycle of Robyn's Boutique by taking into consideration the desired ratios. [6 marks] (c) Comment on the ROE & ROA of the firm during the period. What inference would you draw? [4 marks] 0 Q5] The financial statements of Robyn's Boutique, which designs and retails children's clothes are as follows: Income Statement for the year ended December 31, 2020 (Amount in *' 00) Sales Revenue 11,00,000 Cost of merchandise sold (7,10,000) Gross Profit 3,90,000 Operating expenses: Depreciation expense 23,500 Patent amortization 7,000 Other Operating expenses 196,000 Total Operating Expenses (2,26,500) Income from operations 1,63,500 Other Income: Gain on sale of Investments 11,000 Other expense: Interest expense (26,000) (15,000) Income before Income Tax 1,48,500 Income tax expense (50,000) Net Income 98,500 Comparative Balance sheets (Amount in *' 00) 31/12/2020 31/12/2019 Assets Cash 140,350 95,900 Accounts Receivable (net) 95,300 102,300 Inventory 165,200 157,900 Prepaid Expense 6,240 5,860 Investments (long-term) 35,700 84,700 Land 75,000 90,000 Property & Equipment: Buildings 375,000 260,000 Accumulated depreciation (Buildings) (71,300) (58,300) Machinery & Equipment 428,300 428,300 Acc. Depreciation (Mach. & Equip) (148,500) (138,000) Patents 58,000 65,000 Total Assets 11,59,290 10,93,660 Liabilities & Stockholders' Equity Accounts Payable 43,500 46,700 Accrued Operating Expenses 14,000 12,500 Income tax payable 7,900 8,400 Dividends Payable 14,000 10,000 Mortgage Notes Payable, due 2020 40,000 Bonds Payable 150,000 250,000 Capital stock, * 30 par 450,000 375,000 Excess of issue price over par-capital stock 66,250 41,250 Retained earnings 373,640 349,810 Total Liabilities & Stockholders' Equity 11,59,290 10,93,660 Additional Information (Amount in *'00): (1) Land costing 15,000 was sold for 15,00,000 during the period; (2) A mortgage note was issued for 40,000; (3) A building costing 115,000 was constructed; (4) 2,50,000 shares of common stock were issued at 140 in exchange for the bonds payable amount in * 00 to be considered); (5) Cash dividends declared were *74,670. Required: (a) Prepare Common-size Statement of Balance Sheet for 2019 and 2020 and analyze the performance of Robyn's Boutique during the period. [10 marks] (b) Calculate the duration of Operating Cycle of Robyn's Boutique by taking into consideration the desired ratios. [6 marks] (c) Comment on the ROE & ROA of the firm during the period. What inference would you draw? [4 marks] 0