For Year 2011 For Year 2012 Cost of Goods Sold $168,200 $199,500 Cash $22,900 as

Question

For Year 2011                                     For Year 2012

Cost of Goods Sold                                 $168,200                                              $199,500

Cash                                                              $22,900 as of 12/31                         $28,137 as of 12/31

Interest Paid                                             $9,899                                                   $11,704

Selling & Gen Admin Expenses          $22,100                                 28,800

Fixed Assets net of Depreciation      $150,750 as of 12/31                      $197,115 as of 12/31

     (i.e., Net Fixed Assets)

Annual Net Sales                                     $290,000                                              $332,500

Depreciation                                             $31,400                                                 $41,000

Accounts Receivable                              $12,712                                 $17,308

Accounts Payable                                    $26,725 as of 12/31                          $31,003 as of 12/31

Notes Payable                                          $11,270 as of 12/31                          $12,305 as of 12/31

Inventory                                                   $25,877                                 $31,667

Long term Debt                                        $64,950 as of 12/31                         $77,150 as of 12/31

New Equity                                                                $0 for this year                                  $15,636 for this year

Dividend Payout Percentage              20%                                                        20%

(% of Earnings Available to Common Shareholders)           

Tax rate                                                       30%                                                        30%

Number of days in the year                                365                                                         365

Income Statement for both the years

Prepare

Statement of Cash Flows for 2012

Compute the following Ratios for both the years

Gross Profit Margin,

Times Interest Earned,

Average Collection Period in Days,

Inventory Turnover

Capital Intensity Ratio

Explanation / Answer

1. Gross Profit Margin = Gross profit /sales*100

Gross profit = sales -cost of goods sold

2011 = 121800/290000*100 = 42%

2012 = 133000/332500*100 = 40%

2.Times interest earned = Earning before interest and tax/ Interest expense

2011 = 58401/9899 = 5.899

2012 = 51496/11704 = 4.399

3 Average collection period in days = debtors/sales*No. of days

2011= 12712/290000*365 = 15.99 days

2012 = 17308 / 332500*365 = 18.99 days

4. Inventory turnover = Cost of goods sold/ average inventory

2011 = 168200/25877 = 6.49 times

2012 = 199500/28772 = 6.93 times

Average inventory = Op. stock + closing stock/2

2012 = 25877+31667/2 =28772

5. Capital intensity ratio = Total assets/sales

2011 = 212239/290000 = 0.73

2012 = 274227/ 332500 = 0.82

Cash flow statement for year 2012

Cash flow from operating activities Interest paid (11704) Selling & Gen admin expense (28800) Tax paid 30 % of 51796 (15539) Net profit after deducting all expense 51796 (4247) cash flow from investing activities Cash flow from financing activities Dividend paid (7261) Net increase / decrease in cash or cash equivalent (11508) Cash of the year 28137 Cash at the end 16629

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