Question
Required information Skip to question Use the following financial statements for questions 1 through 4: Manutech Ltd Income Statement Year Ended December 31 2019 2018
Required information
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| Use the following financial statements for questions 1 through 4: | ||||
| Manutech Ltd | ||||
| Income Statement | ||||
| Year Ended December 31 | ||||
| 2019 | 2018 | |||
| Net sales | $ 1,470,000 | $ 1,200,000 | ||
| Variable Costs | 882,000 | 720,000 | ||
| Contribution Margin | $ 588,000 | $ 480,000 | ||
| Fixed Costs | 177,000 | 114,000 | ||
| Operating income (EBIT) | $ 411,000 | $ 366,000 | ||
| Interest expense | 56,200 | 53,600 | ||
| Earnings before taxes (EBT) | $ 354,800 | $ 312,400 | ||
| Income tax expense | 106,440 | 93,720 | ||
| Earnings after taxes (EAT) | $ 248,360 | $ 218,680 | ||
| Manutech Ltd | ||||
| Statement of Financial Position | ||||
| Year Ended December 31 | ||||
| 2019 | 2018 | |||
| Assets | ||||
| Current Assets | ||||
| Cash | $ 8,360 | $ 79,500 | ||
| Accounts Receivable | 150,000 | 105,000 | ||
| Merchandise Inventory | 112,000 | 90,000 | ||
| Total Current Assets | $ 270,360 | $ 274,500 | ||
| Property, Plant and Equipment | 1,555,000 | 1,255,000 | ||
| Accumulated Depreciation | (455,000) | (290,000) | ||
| Property, Plant and Equiment (net) | $ 1,100,000 | $ 965,000 | ||
| Intangible Assets | 120,000 | 120,000 | ||
| Total Assets | $ 1,490,360 | $ 1,359,500 | ||
| Liabilities & Shareholder's Equity | ||||
| Current Liabilities | ||||
| Accounts Payable | $ 65,000 | $ 72,500 | ||
| Accrued Liabilities | 15,000 | 20,000 | ||
| Bank Loan | 85,000 | - | ||
| Total Current Liabilities | $ 165,000 | $ 92,500 | ||
| Mortage Payable | 650,000 | 670,000 | ||
| Total Liaibilities | $ 815,000 | $ 762,500 | ||
| Shareholder's Equity | ||||
| Common Shares (10,000 issued) | 100,000 | 100,000 | ||
| Retained Earnings | 575,360 | 497,000 | ||
| Total Shareholder's Equity | $ 675,360 | $ 597,000 | ||
| Total Liab & Shareholder's Equity | $ 1,490,360 | $ 1,359,500 | ||
Manutech Ltd had a good year in 2019. Sales were up significantly and are expected continue to grow in 2020. The company has hired you as their new financial analyst and they want you to finish creating the year-end reporting package for the owner.
Specifically, you need to complete the table of ratios your predecessor started and comment on how the company is doing compared to industry averages. You also need to create the Statement of Cash Flows for 2019.
Finally, theyre a little concerned about the impact their high rate of growth is having on the financial stability of the company. They ask you to compare company results to industry results using the three components of DuPont analysis.
Complete the following table of ratios for the 2019 results of Manutech Ltd. To complete the table, you will need the following information:
- All sales are on credit.
- The income statement is formatted using the Contribution Margin approach. For those calculations that need it, the cost of goods sold is $794,000.
- The company has traditionally ignored Intangible Assets in the Capital Asset Turnover calculation. (Use only PP&E for that calculation.)
Enter all numbers to three (3) decimal places (this will ensure proper marking by Connect). Be sure to indicate the correct label and how the company is doing against the industry measure for ALL ratios, not just the ones that you calculate.
| Calculation for | Choose the | Industry | Better | |
| Ratio Name | Manutech Ltd | correct label | Measure | or worse? |
| Profit margin | 16.895 | (Click to select) Percent days times | 15.100 | (Click to select) Better Worse |
| Return on assets |
| (Click to select) Percent days times | 12.100 | (Click to select) Better Worse |
| Return on equity |
| (Click to select) Percent days times | 37.500 | (Click to select) Better Worse |
| Receivables turnover |
| (Click to select) Percent days times | 8.600 | (Click to select) Better Worse |
| Average collection period | 37.245 | (Click to select) Percent days times | 42.400 | (Click to select) Better Worse |
| Inventory turnover |
| (Click to select) Percent days times | 9.100 | (Click to select) Better Worse |
| Accounts payable turnover | 12.215 | (Click to select) Percent days times | 8.500 | (Click to select) Better Worse |
| Accounts payable period |
| (Click to select) Percent days times | 42.900 | (Click to select) Better Worse |
| Capital asset turnover |
| (Click to select) Percent days times | 2.400 | (Click to select) Better Worse |
| Total asset turnover | 0.986 | (Click to select) Percent days times | 0.800 | (Click to select) Better Worse |
| Current ratio | 1.639 | (Click to select) Percent days times | 2.000 | (Click to select) Better Worse |
| Quick ratio |
| (Click to select) Percent days times | 1.500 | (Click to select) Better Worse |
| Debt to Total Assets | 0.547 | (Click to select) Percent days times | 0.410 | (Click to select) Better Worse |
| Times interest earned |
| (Click to select) Percent days times | 4.521 | (Click to select) Better Worse |
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
