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Question 4 ( Financial Planning and Ratio Analysis) 25 Marks Consider the following simplified Financial Statement Income statement Sales $32,000 Cost of sales 24,400 Net
Question 4 (Financial Planning and Ratio Analysis) 25 Marks
Consider the following simplified Financial Statement
Income statement
Sales $32,000
Cost of sales 24,400
Net Income 7,600
Balance Sheet
Cash $500 Accounts Receivables 2,000 Inventory 5,000 Net Fixed Assets 7,500 Total Assets 15,000 | Accounts payables $1,000 Long term debt 2,000 Equity 12,000
Total Liabilities and Equities 15,000 |
Required:
- Create a proforma Income statement (Assume a 10% growth rate)
- Create a proforma Balance Sheet (Assume a 10% growth rate for assets and liabilities)
- Calculate the following Ratios from the simplified financial statements above):
- Profit Margin
- Return on Assets
- Return on Equity
- Current Ratio
- Quick Ratio
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