Reference no: EM132797154
This Year Last Year
Balance Sheet Cash 50,000 40,000
Accounts receivable 80,000 60,000
Inventories 180,000 110,000
Plant & equipment 300,000 260,000
Less acc depreciation -40,000 -20,000
Total assets 570,000 450,000
Accounts payable 100,000 150,000
Accrued liabilities 70,000 50,000
Mortgage payable 80,000 0
Common stock 130,000 90,000
Retained earnings 190,000 160,000
Total liabilities and equity 570,000 450,000
Income Statement
This Year Last Year
Net Sales 680,000 600,000
COGS 410,000 330,000
Gross profit 270,000 270,000
Operating expenses 190,000 192,000
Operating income 80,000 78,000
Interest expense 7,000 2,000
Profit before taxes 73,000 76,000
Taxes 22,000 22,800
Net income 51,000 53,200
Other data:
- Cash dividends paid this year were $21,000.
- The change in accumulated depreciation account is the depreciation for the year
problem 1: Prepare the current year statement of cash flows using the indirect method and reconcile the cash account.
problem 2: Bases on the financial statement prepared calculate the efficiency ratios, liquidity ratios, leverage ratios and profitability ratios. Use a 360 day year. All sales are on credit to business customer. Assume an income tax rate of 30 percent.
problem 3: Based upon your answers would you provide a credit line to this company? Support your decision.