Review the economic statements for this lemonade stand (see page 1 of the Season
ID: 2369597 • Letter: R
Question
Review the economic statements for this lemonade stand (see page 1 of the Season Three Sample Attached). What do these statements tell you about the operation? Focus on Economic Profits, including Implicit Revenue and Expenses
Page 1
Sample Reports for Season Three
Balance Sheet Season 1 Season 2 Season 3
Assets
Cash $ 185.90 $ 425.65 $ 679.40
Inventories $ 10.05 $ 14.85 $ 1.59
Equipment $ 9.00 $ 14.75 $ 14.75
Total Assets $ 204.95 $ 455.25 $ 695.74
Liabilities
Account Payables $ 39.00 $ 58.00 $ 21.25
Total Liabilities $ 39.00 $ 58.00 $ 21.25
Equity
Owner Capital $ 40.00 $ 40.00 $ 40.00
Retain Earnings $ 125.95 $ 357.25 $ 634.49
Total Equity $ 165.95 $ 397.25 $ 674.49
Total Equity & Liabilities $ 204.95 $ 455.25 $ 695.74
Accounting Income Statement
Revenue $ 185.90 $ 328.00 $ 404.00
Expenses $ 59.95 $ 96.70 $ 126.76
Earnings $ 125.95 $ 231.30 $ 277.24
Financial Report
ROE 75.9% 58.2% 41.1%
ROA 61.5% 50.8% 39.8%
Profit Margin 67.8% 70.5% 68.6%
Inventory Turnover 5.97 6.51 79.72
Asset Turnover 0.907 0.720 0.581
Current Ratio 5.02 7.59 32.05
Cash Ratio 4.77 7.34 31.97
Debt-Equity Ratio 0.235 0.146 0.032
Economic Profit Report
Explicit Revenue $ 185.90 $ 328.00 $ 404.00
Implicit Revenue $ 75.00 $ 50.00 $ 50.00
Total Revenues $ 260.90 $ 378.00 $ 454.00
Explicit Expenses $ 59.95 $ 96.70 $ 126.76
Implicit Expenses $ 156.00 $ 177.13 $ 210.25
Total Costs $ 215.95 $ 273.83 $ 337.01
Economic Profits $ 44.95 $ 104.18 $ 116.99
PAGE 1
Notes for Economic Profit Report
Implicit Revenue includes $50 for the value of being one own boss for each season plus
$25 for season one for learning about running a business. (In your report these need to
be justified.) Implicit epenses are the number of hours worked times $6 for season one, $6.50 for
season two, and $7.25 for season three. (In your report these need to be justified.)
Explicit Revenue is the same as Revenues from the
Explanation / Answer
Please post the question in parts. Please re-post after rating.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.