Financial Analysis of Petrisin Company for Fiscal Year Ended December 31, 2014
Practice problem answers
Income Statement
Farwell Company has the following information available from its most recent fiscal year.
Use the relevant information to determine the net income (loss) for the period.
Revenues:
Cash Sales
$40,000
Sales on Account
$58,000
Total Revenue
$98,000
Expenses:
COGS
102,000
Empl salary expense
30,000
Utility expense
1,500
Property tax expense
10,000
Rent expense
12,000
Total Operating Expenses
$155,500
Operating Income
($57,500)
Interest Income
100
Net Income (Loss)
($57,400)
Cash sales, $40,000
Employee salary expense, $30,000
Common stock issued for cash, $100,000
Sales on account, $58,000
Utility expense, $1,500
Long-term loan received, $50,000
Interest earned on investments, $100
Property tax expense, $10,000
Inventory purchased for resale, $120,000
Cost of inventory sold, $102,000
Insurance purchased for the next year, $4,800
Rent expense, $12,000
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2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
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Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expense
$39,000
Rent expense
45,000
Depreciation expense
11,000
Bad debt expense
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
Quick ratio:
(Cash + Short-term investments +
Receivables) / Current liabilities
($24,200+ $45,650) /
(
$
2
6
,
4
0
0
+
$
3
,
8
5
0
+
7
,
4
2
5
)
=
1
.
8
5
$
6
9
,
8
5
0
/
$
3
7
,
6
7
5
=
1
.
8
5
Financial Analysis
(P2.7 pg.60)
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2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
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D
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2
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1
4
Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expense
$39,000
Rent expense
45,000
Depreciation expense
11,000
Bad debt expense
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
Current ratio:
Current assets / Current liabilities
($24,200 + $45,650 + $79,200) /
(
$
2
6
,
4
0
0
+
$
3
,
8
5
0
+
7
,
4
2
5
)
=
3
.
9
6
$
1
4
9
,
0
5
0
/
$
3
7
,
6
5
0
=
3
.
9
6
Financial Analysis
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m
b
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3
1
,
2
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1
4
a
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d
2
0
1
3
2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
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Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expense
$39,000
Rent expense
45,000
Depreciation expense
11,000
Bad debt expense
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
Gross margin ratio:
Gross margin / Sales
$
1
6
8
,
2
5
0
/
$
4
0
0
,
0
0
=
4
2
.
0
6
%
Financial Analysis
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b
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3
1
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2
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1
4
a
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d
2
0
1
3
2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
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D
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2
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4
Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expense
$39,000
Rent expense
45,000
Depreciation expense
11,000
Bad debt expense
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
Return on sales ratio:
Net income / Sales
$
4
2
,
7
5
0
/
$
4
0
0
,
0
0
=
1
0
.
6
9
%
Financial Analysis
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2
0
1
3
2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
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D
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,
2
0
1
4
Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expense
$39,000
Rent expense
45,000
Depreciation expense
11,000
Bad debt expense
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
Return on
investment ratio:
Net income / Average total assets
$
4
2
,
7
5
0
/
(
[
$
3
1
6
,
0
0
+
$
3
7
7
,
8
5
0
]
/
2
)
=
1
2
.
3
2
%
$
4
2
,
7
5
0
/
(
$
6
9
3
,
8
5
0
/
2
)
=
1
2
.
3
2
%
$
4
2
,
7
5
0
/
$
3
4
6
,
9
2
5
)
=
1
2
.
3
2
%
Financial Analysis
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m
b
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r
3
1
,
2
0
1
4
a
n
d
2
0
1
3
2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
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D
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m
b
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3
1
,
2
0
1
4
Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expense
$39,000
Rent expense
45,000
Depreciation expense
11,000
Bad debt expense
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
Return on owners’
equity ratio:
Net income / Average owners’ equity
$
4
2
,
7
5
0
/
(
[
$
8
0
,
0
0
+
$
8
6
,
5
0
0
+
$
8
8
,
0
0
+
$
1
4
2
,
1
7
5
]
/
2
)
=
2
1
.
5
5
%
$
4
2
,
7
5
0
/
(
[
$
1
6
6
,
5
0
0
+
$
2
3
0
,
1
7
5
]
/
2
)
=
2
1
.
5
5
%
$
4
2
,
7
5
0
/
(
[
$
3
9
6
,
6
7
5
]
/
2
)
=
2
1
.
5
5
%
$
4
2
,
7
5
0
/
$
1
9
8
,
3
3
7
.
5
0
=
2
1
.
5
5
%
Financial Analysis
P
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D
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m
b
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3
1
,
2
0
1
4
a
n
d
2
0
1
3
2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
P
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F
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Y
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a
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E
n
d
e
d
D
e
c
e
m
b
e
r
3
1
,
2
0
1
4
Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expenses
$39,000
Rent expenses
45,000
Depreciation expense
11,000
Bad debt expensee
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
Debt to equity ratio:
Total debt / Total owners’ equity
(
$
2
6
,
4
0
0
+
$
3
,
8
5
0
+
$
7
,
4
2
5
+
$
1
1
0
,
0
0
0
)
/
(
$
8
8
,
0
0
0
+
$
1
4
2
,
1
7
5
)
=
6
4
t
o
1
.
0
0
$
1
4
7
,
6
7
5
/
$
2
3
0
,
1
7
5
=
6
4
t
o
1
.
0
0
Financial Analysis
P
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C
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p
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i
v
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B
a
l
a
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c
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S
h
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t
–
D
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c
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m
b
e
r
3
1
,
2
0
1
4
a
n
d
2
0
1
3
2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
P
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C
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p
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–
I
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t
a
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m
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–
F
o
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t
h
e
Y
e
a
r
E
n
d
e
d
D
e
c
e
m
b
e
r
3
1
,
2
0
1
4
Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expense
$39,000
Rent expense
45,000
Depreciation expense
11,000
Bad debt expense
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
A/R turnover:
Sales / Average accounts
receivable
$
4
0
0
,
0
0
0
/
(
[
$
3
9
,
0
0
0
+
$
4
5
,
6
5
0
]
/
2
)
=
9
.
4
5
t
i
m
e
s
$
4
0
0
,
0
0
0
/
(
$
8
4
,
6
5
0
/
2
)
=
9
.
4
5
t
i
m
e
s
$
4
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6
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Financial Analysis
P
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t
r
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s
i
n
C
o
m
p
a
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y
–
C
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p
a
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B
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m
b
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r
3
1
,
2
0
1
4
a
n
d
2
0
1
3
2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
P
e
t
r
i
s
i
n
C
o
m
p
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y
–
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n
d
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d
D
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c
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m
b
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r
3
1
,
2
0
1
4
Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expense
$39,000
Rent expense
45,000
Depreciation expense
11,000
Bad debt expense
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
Inventory turnover:
Cost of sales / Average inventory
$
2
3
1
,
7
5
0
/
(
[
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7
9
,
2
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0
+
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6
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2
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=
3
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2
4
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6
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Financial Analysis
P
e
t
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s
i
n
C
o
m
p
a
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y
–
C
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m
p
a
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B
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m
b
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3
1
,
2
0
1
4
a
n
d
2
0
1
3
2014
2013
Cash
$ 24,200
$ 20,000
Accounts receivable
45,650
39,000
Inventory
79,200
64,000
Plant and equipment
316,800
265,000
Accumulated depreciation
(
88,000)
(
72,000)
Total assets
$377,850
$316,000
Accounts payable
$ 26,400
$ 37,000
Wages payable
3,850
4,000
Taxes payable
7,425
8,500
Bonds payable
110,000
100,000
Common stock
88,000
80,000
Retained earnings
142,175
86,500
Total liabilities and shareholder’s equity
$377,850
$316,000
___________________________________________
______________________________________
P
e
t
r
i
s
i
n
C
o
m
p
a
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y
–
I
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c
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S
t
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m
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–
F
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Y
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E
n
d
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d
D
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c
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m
b
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r
3
1
,
2
0
1
4
Sales
$400,000
Cost of goods sold
231,750
Gross margin
$ 168,250
Operating expenses:
Selling expense
$39,000
Rent expense
45,000
Depreciation expense
11,000
Bad debt expense
1,715
Interest expense
15,000
111,715
Income from operations
$ 56,535
Loss on sale of equipment
(2
,000)
Income before taxes
$ 54,535
Income tax expense
11,785
Net income
$ 42,750
A/P turnover:
Cost of goods sold / Average
accounts payable
$
2
3
1
,
7
5
0
/
(
[
$
3
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0
0
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$
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Days in the collection period:
3
6
5
/
7
.
3
1
=
4
9
.
9
3
d
a
y
s
Financial Analysis
The financial analysis of Petrisin Company for the fiscal year ending December 31, 2014, reveals key financial information including sales, costs, gross margin, operating expenses, income from operations, net income, and more. The analysis highlights the company's performance in terms of profitability, liquidity, and overall financial health.
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Presentation Transcript
M1 - TRAINING Income Statement Farwell Company has the following information available from its most recent fiscal year. Use the relevant information to determine the net income (loss) for the period. Cash sales, $40,000 Employee salary expense, $30,000 Common stock issued for cash, $100,000 Sales on account, $58,000 Utility expense, $1,500 Long-term loan received, $50,000 Interest earned on investments, $100 Property tax expense, $10,000 Inventory purchased for resale, $120,000 Cost of inventory sold, $102,000 Insurance purchased for the next year, $4,800 Rent expense, $12,000 Revenues: Cash Sales Sales on Account Total Revenue Expenses: COGS Empl salary expense 30,000 Utility expense Property tax expense 10,000 Rent expense Total Operating Expenses Operating Income Interest Income Net Income (Loss) $40,000 $58,000 $98,000 102,000 1,500 12,000 $155,500 ($57,500) 100 ($57,400)
M1 - TRAINING Financial Analysis (P2.7 pg.60) Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expense Rent expense Depreciation expense Bad debt expense Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 (Cash + Short-term investments + Receivables) / Current liabilities ($24,200+ $45,650) / ($26,400+ $3,850+ 7,425) = 1.85 $69,850 / $37,675 = 1.85 $400,000 231,750 $ 168,250 $39,000 45,000 11,000 1,715 15,000 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750
M1 - TRAINING Financial Analysis Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expense Rent expense Depreciation expense Bad debt expense Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 Current assets / Current liabilities ($24,200 + $45,650 + $79,200) / ($26,400 + $3,850 + 7,425) = 3.96 $149,050 / $37,650 = 3.96 $400,000 231,750 $ 168,250 $39,000 45,000 11,000 1,715 15,000 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750
M1 - TRAINING Financial Analysis Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expense Rent expense Depreciation expense Bad debt expense Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 $400,000 231,750 $ 168,250 Gross margin / Sales $168,250 / $400,00 = 42.06% $39,000 45,000 11,000 1,715 15,000 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750
M1 - TRAINING Financial Analysis Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expense Rent expense Depreciation expense Bad debt expense Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 $400,000 231,750 $ 168,250 $39,000 45,000 11,000 1,715 15,000 Net income / Sales 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750 $42,750 / $400,00 = 10.69%
M1 - TRAINING Financial Analysis Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expense Rent expense Depreciation expense Bad debt expense Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 Net income / Average total assets $400,000 231,750 $ 168,250 $42,750 / ([$316,00 + $377,850] / 2) = 12.32% $39,000 45,000 11,000 1,715 15,000 $42,750 / ($693,850 / 2) = 12.32% $42,750 / $346,925) = 12.32% 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750
M1 - TRAINING Financial Analysis Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expense Rent expense Depreciation expense Bad debt expense Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 Net income / Average owners equity $42,750 / ([$80,00 + $86,500 + $88,00 + $142,175] / 2) = 21.55% $400,000 231,750 $ 168,250 $42,750 / ([$166,500 + $230,175] / 2) = 21.55% $39,000 45,000 11,000 1,715 15,000 $42,750 / ([$396,675] / 2) = 21.55% 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750 $42,750 / $198,337.50 = 21.55%
M1 - TRAINING Financial Analysis Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expenses Rent expenses Depreciation expense Bad debt expensee Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 Total debt / Total owners equity $400,000 231,750 $ 168,250 ($26,400 + $3,850 + $7,425 + $110,000) / ($88,000 + $142,175) = 64 to 1.00 $39,000 45,000 11,000 1,715 15,000 $147,675 / $230,175 = 64 to 1.00 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750
M1 - TRAINING Financial Analysis Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expense Rent expense Depreciation expense Bad debt expense Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 Sales / Average accounts receivable $400,000 / ([$39,000 + $45,650] / 2) = 9.45 times $400,000 / ($84,650 / 2) = 9.45 times $400,000 / $42,325 = 9.45 times $400,000 231,750 $ 168,250 Days in the collection period: 356 / 9.45 = 38.62 days $39,000 45,000 11,000 1,715 15,000 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750
M1 - TRAINING Financial Analysis Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expense Rent expense Depreciation expense Bad debt expense Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 Cost of sales / Average inventory $231,750 / ([$79,200 + $64,000] / 2) = 3.24 $231,750 / ($143,200 / 2) = 3.24 $231,750 / $71,600= 3.24 Days in the selling period: 356 / 3.24 = 112.65 days $400,000 231,750 $ 168,250 $39,000 45,000 11,000 1,715 15,000 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750
M1 - TRAINING Financial Analysis Petrisin Company Comparative Balance Sheet December 31, 2014 and 2013 Accounts receivable Inventory Plant and equipment Accumulated depreciation Total assets Accounts payable Wages payable Taxes payable Bonds payable Common stock Retained earnings Total liabilities and shareholder s equity _________________________________________________________________________________ Petrisin Company Income Statement For the Year Ended December 31, 2014 Sales Cost of goods sold Gross margin Operating expenses: Selling expense Rent expense Depreciation expense Bad debt expense Interest expense Income from operations Loss on sale of equipment Income before taxes Income tax expense Net income Cash 2014 2013 $ 24,200 45,650 79,200 316,800 (88,000) $377,850 $ 26,400 3,850 7,425 110,000 88,000 142,175 $377,850 $ 20,000 39,000 64,000 265,000 (72,000) $316,000 $ 37,000 4,000 8,500 100,000 80,000 86,500 $316,000 Cost of goods sold / Average accounts payable $231,750 / ([$37,000+ 26,400 ]/ 2) = 7.31 times $231,750 / ($63,400 / 2) = 7.31 times $231,750 / $31,700 = 7.31 times $400,000 231,750 $ 168,250 Days in the collection period: 365 / 7.31 = 49.93 days $39,000 45,000 11,000 1,715 15,000 111,715 $ 56,535 (2,000) $ 54,535 11,785 $ 42,750
