can you answer #4 Return on assets and #5 Shamrock Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Shamrock and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,920 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $6,040 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Shamrock’s cash flow problems are due primarily to the company’s desire to finance a $298,670 plant expansion over the next 2 fiscal years through internally generated funds. The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years. Shamrock Corporation Balance Sheet March 31 Assets 2021 2020 Cash $18,060 $12,500 Notes receivable 146,670 131,400 Accounts receivable (net) 131,210 125,380 Inventories (at cost) 104,100 50,310 Plant & equipment (net of depreciation) 1,444,840 1,429,170 Total assets $1,844,880 $1,748,760 Liabilities and Owners’ Equity Accounts payable $79,330 $91,520 Notes payable 75,880 61,310 Accrued liabilities 3,030 15,240 Common stock (130,000 shares, $10 par) 1,295,390 1,301,330 Retained earningsa 391,250 279,360 Total liabilities and stockholders’ equity $1,844,880 $1,748,760 aCash dividends were paid at the rate of $1 per share in fiscal year 2020 and $2 per share in fiscal year 2021. Shamrock Corporation Income Statement For the Fiscal Years Ended March 31 2021 2020 Sales revenue $3,003,000 $2,673,550 Cost of goods solda 1,531,860 1,423,760 Gross margin 1,471,140 1,249,790 Operating expenses 859,420 780,390 Income before income taxes 611,720 469,400 Income taxes (40%) 244,688 187,760 Net income $367,032 $281,640 aDepreciation charges on the plant and equipment of $99,950 and $101,590 for fiscal years ended March 31, 2020 and 2021, respectively, are included in cost of goods sold. (a) Compute the following items for Shamrock Corporation. (Round answers to 2 decimal places, e.g. 2.25 or 2.25%.) 1. Current ratio for fiscal years 2020 and 2021. 2. Acid-test (quick) ratio for fiscal years 2020 and 2021. 3. Inventory turnover for fiscal year 2021. 4. Return on assets for fiscal years 2020 and 2021. (Assume total assets were $1,681,980 at 3/31/19.) 5. Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2020 to 2021. 2020 2021 1. Current ratio enter the ratio rounded to 2 decimal places :1 enter the ratio rounded to 2 decimal places :1 2. Acid-test (quick) ratio enter the ratio rounded to 2 decimal places :1 enter the ratio rounded to 2 decimal places :1 3. Inventory turnover enter the inventory turnover rounded to 2 decimal places times 4. Return on assets enter the return on assets in percentages rounded to 2 decimal places % enter the return on assets in percentages rounded to 2 decimal places % 5. Percent Changes Percent Increase Sales revenue enter percentages rounded to 2 decimal places % Cost of goods sold enter percentages rounded to 2 decimal places % Gross margin enter percentages rounded to 2 decimal places % Net income after taxes enter percentages rounded to 2 decimal places
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
can you answer #4 Return on assets and #5
Shamrock Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Shamrock and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,920 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $6,040 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Shamrock’s
The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years.
|
Shamrock Corporation
Balance Sheet March 31 |
||||
|---|---|---|---|---|
| Assets |
2021
|
2020
|
||
|
Cash
|
$18,060 | $12,500 | ||
|
Notes receivable
|
146,670 | 131,400 | ||
|
|
131,210 | 125,380 | ||
|
Inventories (at cost)
|
104,100 | 50,310 | ||
|
Plant & equipment (net of
|
1,444,840 | 1,429,170 | ||
|
Total assets
|
$1,844,880 | $1,748,760 | ||
| Liabilities and Owners’ Equity | ||||
|
Accounts payable
|
$79,330 | $91,520 | ||
|
Notes payable
|
75,880 | 61,310 | ||
|
Accrued liabilities
|
3,030 | 15,240 | ||
|
Common stock (130,000 shares, $10 par)
|
1,295,390 | 1,301,330 | ||
|
Retained earningsa
|
391,250 | 279,360 | ||
|
Total liabilities and
|
$1,844,880 | $1,748,760 | ||
| aCash dividends were paid at the rate of $1 per share in fiscal year 2020 and $2 per share in fiscal year 2021. |
|
Shamrock Corporation
Income Statement For the Fiscal Years Ended March 31 |
||||
|---|---|---|---|---|
|
2021
|
2020
|
|||
|
Sales revenue
|
$3,003,000 | $2,673,550 | ||
|
Cost of goods solda
|
1,531,860 | 1,423,760 | ||
|
Gross margin
|
1,471,140 | 1,249,790 | ||
|
Operating expenses
|
859,420 | 780,390 | ||
|
Income before income taxes
|
611,720 | 469,400 | ||
|
Income taxes (40%)
|
244,688 | 187,760 | ||
|
Net income
|
$367,032 | $281,640 | ||
| aDepreciation charges on the plant and equipment of $99,950 and $101,590 for fiscal years ended March 31, 2020 and 2021, respectively, are included in cost of goods sold. |
(a)
Compute the following items for Shamrock Corporation. (Round answers to 2 decimal places, e.g. 2.25 or 2.25%.)
| 1. | ||
|---|---|---|
| 2. | Acid-test (quick) ratio for fiscal years 2020 and 2021. | |
| 3. | Inventory turnover for fiscal year 2021. | |
| 4. | Return on assets for fiscal years 2020 and 2021. (Assume total assets were $1,681,980 at 3/31/19.) | |
| 5. | Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2020 to 2021. |
|
2020
|
2021
|
|||||||
|---|---|---|---|---|---|---|---|---|
| 1. |
Current ratio
|
enter the ratio rounded to 2 decimal places
|
:1 |
enter the ratio rounded to 2 decimal places
|
:1 | |||
| 2. |
Acid-test (quick) ratio
|
enter the ratio rounded to 2 decimal places
|
:1 |
enter the ratio rounded to 2 decimal places
|
:1 | |||
| 3. |
Inventory turnover
|
enter the inventory turnover rounded to 2 decimal places
|
times | |||||
| 4. |
Return on assets
|
enter the return on assets in percentages rounded to 2 decimal places
|
% |
enter the return on assets in percentages rounded to 2 decimal places
|
% |
| 5. |
Percent Changes
|
Percent Increase
|
|||
|---|---|---|---|---|---|
|
Sales revenue
|
enter percentages rounded to 2 decimal places
|
% | |||
|
Cost of goods sold
|
enter percentages rounded to 2 decimal places
|
% | |||
|
Gross margin
|
enter percentages rounded to 2 decimal places
|
% | |||
|
Net income after taxes
|
enter percentages rounded to 2 decimal places
|
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