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Question 1. Merino Plc 2019 and 2020 Balance Sheets included the following items: Merino Plc Comparative Balance Sheets As of December 31st, 2019 and 2020
Question 1. Merino Plc 2019 and 2020 Balance Sheets included the following items: Merino Plc Comparative Balance Sheets As of December 31st, 2019 and 2020 2020 2019 Cash 120,792 71,232 Accounts Receivable 43,512 52,080 Merchandise Inventory 392,784 313,320 Equipment 236,208 171,360 TOTAL ASSETS 793,296 607,992 Accumulated Depreciation, Equipment 108,192 68,544 Accounts Payable 86,184 79,800 Taxes Payable 10,080 15,120 Common Shares 463,680 369,600 Retained Earnings 125,160 74,928 TOTAL LIABILITIES & EQUITY 793,296 607,992 Merino Plc Income Statement was as follows: Merino Plc Income Statement For The Year Ended December 31st, 2020 Revenue: Sales 1,365.840 Cost Of Goods Sold 624,960 Gross Profit 740,880 Depreciation Expenses: 39,648 Other Expense 402,696 Total Operating Expense 442,344 Profit from operations 298,536 Income Taxes 100,464 NET INCOME 198,072 Required: Prepare the STATEMENT OF CASH FLOWS for the year ended December 31, 2020. Additional information includes the following: a. Equipment was purchased for $64,848 cash b. Issued 3,360 common shares for cash at $28 per share c. Declared and paid cash dividends during the year. Question 2: The following are extracts from the financial statements of Cheviot Plc. Income Statement, for the year ended 30th April 2019 20192018 Sales$11,200$9,750 Cost of sales 8,460 6,825 Gross profit 2,740 2,925 Expenses: Depreciation 560 527 Interest Expense 195 360 Rent expense 1,2901,400 Income Tax expense 150 268 Net Income 545 370 Comparative Balance Sheet, as at 30th April 2019 20192018 Assets Current Assets Cash80120 A/C Receivables12301080 Inventory640490 PPE Equipment18501430 Total Assets38003120 Liabilities: A/C payable750690 Interest payable11080 Taxes payable9575 Total liabilities955845 Equity: Commons shares800800 Long-term Bonds 800600 Retained Earnings1245875 Total Liabilities and Equity38003120 The following ratios are those calculated for Cheviot Plc, based on its published accounts for the previous year, and also the latest industry average ratios: CheviotIndustry average 30th April 2018 Current Ratio2.001.90 Quick Assets ratio1.421.27 Inventory turnover(times)13.9018.30 Days sales uncollected40 days52 days Accounts Payable payment period37 days49 days Profit margin3.793.80 Gross profit ratio30.0035.00 Return on Total Assets11.8512.00 Required: a. Calculate the above comparable ratios for Cheviot Plc for the year ended 30th April 2019. b. Write a report to your board of directors analyzing the performance of Cheviot Plc, comparing the results against the previous year and against industry average. c. If the profit for the year ended 30th April 2018 was $370 compute the Earnings Per Share.
Question 1. Merino Plc 2019 and 2020 Balance Sheets included the following items:
Merino Plc
Comparative Balance Sheets
As of December 31st, 2019 and 2020
2020
2019
Cash
120,792
71,232
Accounts Receivable
43,512
52,080
Merchandise Inventory
392,784
313,320
Equipment
236,208
171,360
TOTAL ASSETS
793,296
607,992
Accumulated Depreciation, Equipment
108,192
68,544
Accounts Payable
86,184
79,800
Taxes Payable
10,080
15,120
Common Shares
463,680
369,600
Retained Earnings
125,160
74,928
TOTAL LIABILITIES & EQUITY
793,296
607,992
Merino Plc Income Statement was as follows:
Merino Plc
Income Statement
For The Year Ended December 31st, 2020
Revenue:
Sales
1,365.840
Cost Of Goods Sold
624,960
Gross Profit
740,880
Depreciation Expenses:
39,648
Other Expense
402,696
Total Operating Expense
442,344
Profit from operations
298,536
Income Taxes
100,464
NET INCOME
198,072
Required:
Prepare the STATEMENT OF CASH FLOWS for the year ended December 31, 2020. Additional information includes the following:
a. Equipment was purchased for $64,848 cash
b. Issued 3,360 common shares for cash at $28 per share
c. Declared and paid cash dividends during the year.
Question 2: The following are extracts from the financial statements of Cheviot Plc.
Income Statement, for the year ended 30th April 2019
20192018
Sales$11,200$9,750
Cost of sales 8,460 6,825
Gross profit 2,740 2,925
Expenses:
Depreciation 560 527
Interest Expense 195 360
Rent expense 1,2901,400
Income Tax expense 150 268
Net Income 545 370
Comparative Balance Sheet, as at 30th April 2019
20192018
Assets
Current Assets
Cash80120
A/C Receivables12301080
Inventory640490
PPE
Equipment18501430
Total Assets38003120
Liabilities:
A/C payable750690
Interest payable11080
Taxes payable9575
Total liabilities955845
Equity:
Commons shares800800
Long-term Bonds 800600
Retained Earnings1245875
Total Liabilities and Equity38003120
The following ratios are those calculated for Cheviot Plc, based on its published accounts for the previous year, and also the latest industry average ratios:
CheviotIndustry average
30th April 2018
Current Ratio2.001.90
Quick Assets ratio1.421.27
Inventory turnover(times)13.9018.30
Days sales uncollected40 days52 days
Accounts Payable payment period37 days49 days
Profit margin3.793.80
Gross profit ratio30.0035.00
Return on Total Assets11.8512.00
Required:
a. Calculate the above comparable ratios for Cheviot Plc for the year ended 30th April 2019.
b. Write a report to your board of directors analyzing the performance of Cheviot Plc, comparing the results against the previous year and against industry average.
c. If the profit for the year ended 30th April 2018 was $370 compute the Earnings Per Share.
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
13th International Edition
1265533199, 978-1265533199
