Below are the condensed comparative Income Statements and Balance Sheets for Zig
ID: 2417392 • Letter: B
Question
Below are the condensed comparative Income Statements and Balance Sheets for Zigoscar Corporation for 2014 and 2013. Zigoscar Corporation Comparative Income Statements For the years ended December 31, 2014 and 2013 2014 2013 Net Sales $ 6,553,600 $ 6,292,800 Cost of goods sold 4,177,600 4,016,800 Gross Margin 2,376,000 2,276,000 Operating expenses: Selling Expenses 953,600 1,036,000 Administrative expenses 894,400 846,400 Total Expenses 1,848,000 1,882,400 Income from operations 528,000 393,600 Interest Expense 131,200 78,400 Income before taxes 396,800 $ 315,200.00 Income tax expense 124,800 113,600 Net Income $ 272,000 $ 201,600 Earnings per share $ 3.40 $ 2.52 Zigoscar Corporation Comparative Balance Sheets December 31, 2014 and 2013 2014 2013 Assets Cash $ 162,400 $ 81,600 Accounts receivable (net) 471,200 458,400 Inventory 1,149,600 1,189,600 Property, Plant & Equip (net) 1,500,000 1,440,000 Total Assets $ 3,283,200 $ 3,169,600 Liabilities and Stockholders Equity Accounts payable $ 535,200.00 $ 954,400.00 Notes payable (short term) 400,000 800,000 Bonds payable 800,000 - Common stock, $10 par value 800,000 800,000 Retained earnings 748,000 615,200 Total Liab. & Stockholders Equity $ 3,283,200 $ 3,169,600 The depreciation expense in 2014 was 5,000. From this information, please complete the following: 1. Create a Statement of Cash Flows of Operations for the year 2014 2. Conduct a Horizontal analysis of the above income statement and balance sheet showing the amount and percentage chages from 2013 to 2014 (Round to one decimal place). 3. Perform the following ratio analysis for 2014. 1. Current Ratio 2. Quick Ratio 3. Receivables Turnover 4. Inventory Turnover 5. Profit margin 6. Return on assets 7. Debt to Equity ratio 8. Return on Equity Below are the condensed comparative Income Statements and Balance Sheets for Zigoscar Corporation for 2014 and 2013. Zigoscar Corporation Comparative Income Statements For the years ended December 31, 2014 and 2013 2014 2013 Net Sales $ 6,553,600 $ 6,292,800 Cost of goods sold 4,177,600 4,016,800 Gross Margin 2,376,000 2,276,000 Operating expenses: Selling Expenses 953,600 1,036,000 Administrative expenses 894,400 846,400 Total Expenses 1,848,000 1,882,400 Income from operations 528,000 393,600 Interest Expense 131,200 78,400 Income before taxes 396,800 $ 315,200.00 Income tax expense 124,800 113,600 Net Income $ 272,000 $ 201,600 Earnings per share $ 3.40 $ 2.52 Zigoscar Corporation Comparative Balance Sheets December 31, 2014 and 2013 2014 2013 Assets Cash $ 162,400 $ 81,600 Accounts receivable (net) 471,200 458,400 Inventory 1,149,600 1,189,600 Property, Plant & Equip (net) 1,500,000 1,440,000 Total Assets $ 3,283,200 $ 3,169,600 Liabilities and Stockholders Equity Accounts payable $ 535,200.00 $ 954,400.00 Notes payable (short term) 400,000 800,000 Bonds payable 800,000 - Common stock, $10 par value 800,000 800,000 Retained earnings 748,000 615,200 Total Liab. & Stockholders Equity $ 3,283,200 $ 3,169,600 The depreciation expense in 2014 was 5,000. From this information, please complete the following: 1. Create a Statement of Cash Flows of Operations for the year 2014 2. Conduct a Horizontal analysis of the above income statement and balance sheet showing the amount and percentage chages from 2013 to 2014 (Round to one decimal place). 3. Perform the following ratio analysis for 2014. 1. Current Ratio 2. Quick Ratio 3. Receivables Turnover 4. Inventory Turnover 5. Profit margin 6. Return on assets 7. Debt to Equity ratio 8. Return on EquityExplanation / Answer
1. Statement of Cash Flows of Operations for the year 2014 :
net income 272000
add: depreciation 5000
add: income tax 124800
add: interest expense 131200
cash flow before working capital 533000
Add:decrease in inventory 40000
less: increase in receivable -12800
decrease in accounts payable -419200
decrease in note payable -400000
net cash flow before tax -259000
less: income tax -124800
net cash used in operating activity -134200
3. 1. Current Ratio = current assets / current liability
= (162,400 + 471,200 + 1,149,600) / (535,200+400,000)
= 1783200 /935200
=1.91
2. . Quick Ratio = current assets - inventory / current liability
= 1783200 - 1,149,600 / 935200
= 633600/935200
= 0.68
3.Receivables Turnover = sale / average Receivables
= 6,553,600 / ( 471,200 + 458,400)/2
= 6553600 / 464800
= 14.1
4. Inventory Turnover = cost of goods sold / average stock
=4,177,600 / (1,149,600 + 1,189,600)/2
= 4177600 / 1169600
= 3.57
5.. Profit margin = net income / sale
=272,000 / 6,553,600
= 4.15%
6 Return on assets = net income / average total assets
=272,000 / (3,283,200 + 3,169,600)/2
= 272000 / 3226400
= 8.43%
7. Debt to Equity ratio = total liability / equity
= (535,200 + 400,000 +800,000) / (800,000 + 748,000)
=1735200 / 1548000
=1.12
8 Return on Equity = net income / equity
= 272,000 / (800,000 + 748,000)
= 272000 / 1548000
= 17.57%
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