The following are the income Statement (lan. 1, 2018 - Dec 31, 2018) and Balance Sheets (both Jan. 1, 2018 and Dec. 31, 2018) for ABC Corp. Use this information to answer questions #1-3 and 5. ABC Corp. 2018 Income Statement Details (Jan 1-Dec 31) Sales $500,000 Cost of goods sold $300,000 Selling and Admin. Costs $60,000 Depreciation $50,000 EBIT Interest expense $90,000 $10,000 EBT $80,000 Tax rate 25% Dividends pald $20,000 Additions to retained earnings $40,000 ABC Corp. Balance Sheet, Jan. 1, 2018 Cash Accounts receivable Inventory $10,000 $20,000 $15,000 Accounts Payable Notes payable $5,000 $10,000 Current assets $45,000 Current Liabilities $15,000 Net fixed assets $300,000 Long term debt Equity Total Liabilities and Equity $150,000 $180,000 $345,000 Total assets $345,000 ABC Corp. Balance Sheet, Dec. 31, 2018 Cash Accounts Receivable Inventory $12,000 $22,000 $20,000 Accounts Payable Notes Payable $7,000 $14,000 Current assets $54,000 Current Liabilities $21,000 Net fixed assets $400,000 Long term debt Equity Total Liabilities and Equity $160,000 $273,000 $454,000 Total assets $454,000 1. Based on the statements from ABC Corp. , prepare a cash flow statement in the following format for the year 2018: Cash flow from operations (10 points) Cash flow from investing (10 points) Cash flow from financing (10 points) 2. Calculate the Cash Conversion Cycle for year-end 2018. Accounts Receivable days (5 points) Inventory days (5 points) Accounts Payable days (5 points) Total CCC: (5 points) If you were consulting ABC Corp. on how to improve their Cash Conversion Cycle, which one of the components of the CCC would you have them focus on and why? (5 points) Explain in words what the following ratios tell us about a company: (3 points each) Current ratio of 1.6: Quick ratio of 0.9: Net profit margin of 12%: Gross profit margin of 55%: Return on assets of 14%: Based on the Year-End 2018 Financial Statement for ABC Corp. calculate the following: (3 points each) Current ratio: Quick ratio: Net profit margin: Gross profit margin: Return on assets: List two supply chain levers that would help resolve the following financial issues: (3 points each total 15 points) Gross profit margin has declined significantly from lastfyear's results even though net profit margin is improving. When compared to our competitors, sales have not grown and market share has declined. Overhead costs at headquarters is 20% higher than our budget expectation. Customers have been paying their invoices far slower than last quarter Our inventory has been growing year over year even though we have had increasing sales
