FINC311-013
Fall 2014
Assignment 2
Instructions: Assignment should be typed (word-processed) and submitted on Sakai by 11:55pm on Monday September 29.
Balance Sheets as on 31st Dec 2012& 31st Dec 2013
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31st Dec 2012 |
31st Dec 2013 |
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Current Assets: |
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Cash |
$500 |
$600 |
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Accounts Receivables |
$2,000 |
$3,000 |
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Inventory |
$1,500 |
$2,500 |
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Total Current Assets |
$4,000 |
$6,100 |
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Fixed Assets: |
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Buildings |
$3,000 |
$4,000 |
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Furniture & office equipment |
$1,000 |
$1,500 |
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Total Fixed Assets |
$4,000 |
$5,500 |
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Total Assets |
$8,000 |
$11,600 |
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Liabilities: |
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Current Liabilities: |
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Accounts Payable |
$1,000 |
$1,200 |
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Notes Payable |
$500 |
$500 |
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Interest Payable |
$100 |
$120 |
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Total Current Liabilities |
$1,600 |
$1,820 |
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Shareholder’s Equity: |
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Common Stock |
$5,000 |
$7,500 |
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Retained earnings |
$1,400 |
$2,280 |
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Total Stockholder’s equity |
$6,400 |
$9,780 |
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Total Liabilities & Stockholder’s equity |
$8,000 |
$11,600 |
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1. Create a comparative balance sheet for 2012-2013.
2. Provide an analysis of the firm’s financial position from 2012 to 2013.
Income Statements for the years ended 31st Dec 2012& 31st Dec 2013
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31st Dec 2012 |
31st Dec 2013 |
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Sales |
$7,000 |
$9,000 |
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Less: Cost of goods sold |
$5,000 |
$6,400 |
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Gross profit |
$2,000 |
$2,600 |
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Less: Operating expenses |
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General & administrative expenses |
$200 |
$300 |
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Selling & distribution expenses |
$400 |
$500 |
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Other operating expenses |
$100 |
$150 |
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Operating profit |
$1,300 |
$1,650 |
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Less: Interest expenses |
$300 |
$400 |
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Net income before taxes |
$1,000 |
$1,250 |
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Less: Taxes at 30% |
$300 |
$375 |
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Net Income after taxes |
$700 |
$875 |
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3. Create common-size income statements for 2012 and 2013.
5. Calculate the following ratios for 2012 and 2013 from the balance sheets and income statements above:
Current ratio, Debt ratio, Debt-equity ratio, Return on Assets, Return on equity, Fixed
asset turnover, Total asset turnover, Inventory turnover, Accounts receivable turnover and Net
profit margin.
6. Comment on the trend in liquidity, solvency, profitability and asset management for this firm.
7. Write a paragraph each for the following topics:
a) Fundamental Analysis
b) Circuit Breakers
c) Burger King and Tax inversion
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