Unit VIII Case Study Cookie Creations (Chapter 18) This assignment is a continuation of the Cookie Creations case study. For this assignment, you will apply what you have learned from Chapter 18 as an introduction to the financial analysis. This assignment will allow you to practice what you have learned so far. Natalie and Curtis have comparative balance sheets and income statements for Cookie & Coffee Creations, Inc. They have been told that they can use these financial statements to prepare horizontal and vertical analyses, to calculate financial ratios, to analyze how their business is doing, and to make some decisions they have been considering. Below, you are provided with the balance sheet and income statement of Cookie & Coffee Creations Inc. for its first year of operations; the year ended October 31, 2021. Review the calculations below, and then review the additional case information to calculate the ratios. COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, 2021 Assets Current assets Cash Accounts receivable 532219 3.250 Inventory 17 897 Prepaid Rent 6.300 $59,666 Property, plant, and equipment Equipment $99,700 Accumulated depreciation equipment _19.850) 89.850 Total assets S296516 Liabilities and Stockholders' Equity Current liabilities Accounts payable $5,786 Income taxes payable 18,500 Dividends payable 700 Salaries and wages payable 2,250 Interest payable 250 Notes payable current portion 4.000 $31,486 Long-term liabilities 6.000 Notes payable long-term portion Total liabilities 37.486 Stockholders' equity Paid-in capital Preferred stock, 2,800 shares issued and outstanding $14,000 Common stock, 25,930 shares issued, 25,180 outstanding 25.930 39,930 Retained earnings 72.600 Total paid in capital and retained earnings 112530 Less: Treasury stock-common (750 shares), at cost 500 Total stockholders' equity 112.030 Total liabilities and stockholders' equity $149.516 $462,500 231.250 231,250 COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2021 Sales Revenue Cost of goods sold Gross profit Operating expenses Salaries and wages expense $92,500 Depreciation expense 9,850 Other operating expenses 35,850 Income from operations Other expenses Interest expense Income before income tax Income tax expense Net income 138.200 93,050 550 92,500 18.500 $74.000 Review the additional case information below. Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more equipment. The loan would be repaid over a 4-year period. The terms of the loan provide for equal semi-annual installment payments of $2,500 on May 1 and November 1 of each year, plus interest of 5% on the outstanding balance. Dividends on preferred stock were $1,400. Since this is the first year of operations and the beginning balances are zero, use the ending balance as the average balance where appropriate. Complete the tasks listed below. a. Calculate the following ratios: 1. current ratio, 2. accounts receivable turnover, 3. inventory turnover, 4. debt to assets ratio, 5. times interest earned, 6. gross profit rate, 7. profit margin 8. asset turnover, 9. return on assets, and 10. return on common stockholders' equity. b. Comment on your findings from item "a." Based on your analysis in items 'b' and 'c," do you think a bank would lend Cookie & Coffee Creations Inc. $20,000 to buy the additional equipment? Explain your reasoning d. What alternatives could Cookie & Coffee Creations Inc. consider instead of bank financing? C Complete your calculations for item "a" in either an Excel spreadsheet or a Word document. If you complete item "a" in an Excel spreadsheet, complete items "b-d" in a Word document, and submit the Excel spreadsheet and the Word document in Blackboard. If you complete items "ad" in a Word document, submit your calculations to item "a" and your responses for items "b-d" in a single Word document in Blackboard. Your total submission should be a minimum of two pages in length, including your calculations. Include at least two references. Adhere to APA Style when creating citations and references for this assignment. Unit VIII Case Study Cookie Creations (Chapter 18) This assignment is a continuation of the Cookie Creations case study. For this assignment, you will apply what you have learned from Chapter 18 as an introduction to the financial analysis. This assignment will allow you to practice what you have learned so far. Natalie and Curtis have comparative balance sheets and income statements for Cookie & Coffee Creations, Inc. They have been told that they can use these financial statements to prepare horizontal and vertical analyses, to calculate financial ratios, to analyze how their business is doing, and to make some decisions they have been considering. Below, you are provided with the balance sheet and income statement of Cookie & Coffee Creations Inc. for its first year of operations; the year ended October 31, 2021. Review the calculations below, and then review the additional case information to calculate the ratios. COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, 2021 Assets Current assets Cash Accounts receivable 532219 3.250 Inventory 17 897 Prepaid Rent 6.300 $59,666 Property, plant, and equipment Equipment $99,700 Accumulated depreciation equipment _19.850) 89.850 Total assets S296516 Liabilities and Stockholders' Equity Current liabilities Accounts payable $5,786 Income taxes payable 18,500 Dividends payable 700 Salaries and wages payable 2,250 Interest payable 250 Notes payable current portion 4.000 $31,486 Long-term liabilities 6.000 Notes payable long-term portion Total liabilities 37.486 Stockholders' equity Paid-in capital Preferred stock, 2,800 shares issued and outstanding $14,000 Common stock, 25,930 shares issued, 25,180 outstanding 25.930 39,930 Retained earnings 72.600 Total paid in capital and retained earnings 112530 Less: Treasury stock-common (750 shares), at cost 500 Total stockholders' equity 112.030 Total liabilities and stockholders' equity $149.516 $462,500 231.250 231,250 COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2021 Sales Revenue Cost of goods sold Gross profit Operating expenses Salaries and wages expense $92,500 Depreciation expense 9,850 Other operating expenses 35,850 Income from operations Other expenses Interest expense Income before income tax Income tax expense Net income 138.200 93,050 550 92,500 18.500 $74.000 Review the additional case information below. Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more equipment. The loan would be repaid over a 4-year period. The terms of the loan provide for equal semi-annual installment payments of $2,500 on May 1 and November 1 of each year, plus interest of 5% on the outstanding balance. Dividends on preferred stock were $1,400. Since this is the first year of operations and the beginning balances are zero, use the ending balance as the average balance where appropriate. Complete the tasks listed below. a. Calculate the following ratios: 1. current ratio, 2. accounts receivable turnover, 3. inventory turnover, 4. debt to assets ratio, 5. times interest earned, 6. gross profit rate, 7. profit margin 8. asset turnover, 9. return on assets, and 10. return on common stockholders' equity. b. Comment on your findings from item "a." Based on your analysis in items 'b' and 'c," do you think a bank would lend Cookie & Coffee Creations Inc. $20,000 to buy the additional equipment? Explain your reasoning d. What alternatives could Cookie & Coffee Creations Inc. consider instead of bank financing? C Complete your calculations for item "a" in either an Excel spreadsheet or a Word document. If you complete item "a" in an Excel spreadsheet, complete items "b-d" in a Word document, and submit the Excel spreadsheet and the Word document in Blackboard. If you complete items "ad" in a Word document, submit your calculations to item "a" and your responses for items "b-d" in a single Word document in Blackboard. Your total submission should be a minimum of two pages in length, including your calculations. Include at least two references. Adhere to APA Style when creating citations and references for this assignment