Accounting and Finance (Essay Sample)

Ratio analysis and cash flow statement
Name
Institution
19. Gross profit (2010) = sales- cost of goods sold
=7920-4200
=3720
Time interest ratio = earnings before interest and tax /interest expense
Total expenses (2010) =depreciation +interest exp+operating expense
=400+280+2130
=2810
Earnings before int. and tax= gross profit – (operating expenses +depreciation)
=3720-2530
=1190
20. Interest expense=280
=1190/280
=4.25
21.
Return on equity =net income /shareholders’ equity
Net income before tax=3720-2810
=910
Shareholder equity =
Asset = owner’s equity +liabilities
Assets =1660+75+4390+6920
=13045
Liabilities=320+165+4500+600
=5585
Equity= asset-liabilities
=13045-5585
=7460
21.ROE=910/7460*100
=12.1984%
22. Cash flow from operating activities (2011) = EBIT+DEPRECIATION- TAXES
Gross profit (2011)=8980-4700
=4280
Less expenses=+2210+560
=2770
Earnings before int and tax=4280-2770
=1510
Cash flow from operating activities=1510+560-460+300
=1910
Working capital changes = (decrease in inventory) =4390-43050
=340
Decrease in receivable=1660-1610=50
Increase in accruals = (300-165) =135
23. Cash flow from investing activities=
=7180-6920
=260
24. Cash flow from financing
=300+450
=750
Profit before tax =9940
Add depreciation=11000
Add decrease inventory =1650
Increase in accruals =70
Increase in payables=1890
=24550
25.Cash flow from operating activities =24550
26. Cash flow from investing activities
Common stock 500
Less retain earnings-180
Cash flow from investing activities=320
27.
Cash from financing activities.
=2960
Balance sheet
Cash50000
Accounts receivable200000
Inventory60000
Net fixed asset325000
Depreciation75000
Gross fixed asset400000
Notes payable18000