Question
Using the Income Statement and Balance Sheet below determine the following financial evaluations. Put answers using equations in the cells under "Answers" in Column C.
Answers
a Market capitalization
b Current ratio
c Quick Ratio
d Debt Ratio
e Earnings per share (EPS)
f Price Earnings Ratio (PE)
g Profit Margin
h Briefly, within the space provided below, discuss implications of the above answers.
| Income Statement |
Year x |
|
|
Balance Sheet |
Year x |
| Revenue |
|
$15,000,000 |
|
Assets |
|
|
|
|
Returns, Credits, etc. |
($5,000) |
|
|
Current Assets |
|
|
Net Sales (Revenue) |
$14,995,000 |
|
|
|
Cash |
$80,000 |
| Direct Costs |
|
|
|
|
Accounts receivable |
$60,000 |
|
Labor |
($4,000,000) |
|
|
|
Finished Goods Inventory |
$40,000 |
|
Materials |
($2,500,000) |
|
|
|
Materials Inventory |
$60,000 |
|
Cost of Goods Sold (COGS) |
($6,500,000) |
|
|
Total Current Assets |
$240,000 |
|
Gross Margin |
$8,495,000 |
|
|
|
|
|
| Selling General and Admin. |
|
|
|
Long term Assets |
|
|
Marketing |
($1,250,000) |
|
|
|
Buildings |
$10,000,000 |
|
Research and Development |
($1,000,000) |
|
|
|
Furniture |
$3,000,000 |
|
Administration |
($750,000) |
|
|
|
Other |
$1,500,000 |
|
Other |
($500,000) |
|
|
Total Fixed Assets |
$14,500,000 |
|
Depreciation |
($250,000) |
|
Total Assets |
|
$14,740,000 |
|
S G & A |
($3,750,000) |
|
|
|
|
|
| Earnings Before Interest and Taxes (EBIT) |
$4,745,000 |
|
Liabilities |
|
|
|
Interest Expense/Income |
($162,300) |
|
|
Current Liabilities |
|
|
Pre-tax Income |
$4,582,700 |
|
|
|
Notes Payable |
$100,000 |
|
Income Tax @ 30% |
($1,374,810) |
|
|
|
Accounts Payable |
$125,000 |
|
Net Income |
$3,207,890 |
|
|
|
Taxes Payable |
$10,000 |
|
|
|
|
|
Total Current Liabilities |
$235,000 |
|
|
|
|
|
Long Term Liabilities |
|
|
|
|
|
|
|
Bank Loans @ 6% |
$455,000 |
|
Current Stock Price |
$28.00 |
|
|
|
Mortgage @ 4.5% |
$3,000,000 |
|
Current Outstanding Shares |
600,000 |
|
|
Total Long Term Liabilities |
$3,455,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital |
Stock |
$9,900,000 |
|
|
|
|
|
|
Retained Earnings |
$1,150,000 |
|
|
|
|
|
Stockholders Equity |
|
$11,050,000 |
|
|
|
|
Total Liabilities and Stockholders equity |
|
$14,740,000 |