Question
Question No. 1 (Marks 15) C Companys forecasted 2020 financial statements are given below, along with industry average ratios. C Company: Forecasted Balance sheet as
Question No. 1 (Marks 15)
C Companys forecasted 2020 financial statements are given below, along with industry average ratios.
C Company: Forecasted Balance sheet as of December 31, 2020
Cash | 72,000 |
Accounts Receivable | 439,000 |
Inventories | 894,000 |
Total Current Assets | 1,405,000 |
Land and Buildings | 238,000 |
Machinery | 132,000 |
Other Fixed assets | 61,000 |
Total Assets | ,1,836,000 |
Equity & Liabilities |
|
Accounts and Notes Payable | 432,000 |
Accrued liabilities | 170,000 |
Total Current liabilities | 602,000 |
Long term Debt | 404,290 |
Common stock | 575,000 |
Retained earnings | 254,710 |
Total Equity & Liabilities | 1,836,000 |
C Company: Forecasted Income Statement for the year ended December 31, 2020
Sales | 4,290,000 |
Cost of goods sold | 3,580,000 |
Gross profit | 710,000 |
General Selling and Admin Expenses | 236,320 |
Depreciation | 159,000 |
Other Expenses | 134,000 |
Profit before Tax | 180,680 |
Taxes 40% | 72,272 |
Profit after tax | 108,408 |
Per Share data
EPS 4.71
DPS .95
Market Price Per Share 23.57
P/E Ratio 5 times
Total No. of Shares 23,000
Industry Average Ratios - 2020
Current Ratio | 2.7 |
Inventory Turnover | 7 times |
Average Collection Period | 32 days |
Total Asset turnover | 2.6 times |
Debt Ratio | 50% |
Profit Margin on Sales | 3.5% |
Quesytion : Calculate C Companys forecasted Ratios, compare them the industry average data and comment briefly on strength and weaknesses of the company ?
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