། Debt-to-Equity (D/E) Ratio Equity Ratio Gearing Ratios = Total Debt + Total Equity = Total Shareholders' Equity - Total Assets Debt Ratio = Total Debt + Total Assets Lola's Company Balance Sheet December 31st, 2020 Assets Cash and Cash Equivalents $100,000 Accounts Receivable $150,000 Inventory $200,000 Prepaid Expenses $50,000 Property, Plant and Equipment $500,000 Total Assets $1,000,000 Liabilities Accounts Payable $100,000 Notes Payable $200,000 Accrued Expenses $50,000 Total Liabilities $350,000 Owner's Equity Common Stock $250,000 Retained Earnings $400,000 Total Owner's Equity $650,000 Total Liabilities and Owner's Equity $1,000,000 Statement of Owner's Equity December 31st, 2020 Owner's Equity at Beginning of Year $400,000 Net Income for the Year $130,000 Issuance of Common Stock $50,000 Dividends Paid ($30,000) Owner's Equity at End of Year $550,000 Lola's Company Statement of Cash Flow December 31st, 2020 Cash Flows from Operating Activities Net Income Depreciation Expense $100,000 $50,000 Increase in Accounts Receivable ($30,000) Increase in Inventory Decrease in Prepaid Expenses $10,000 ($20,000) Net Cash Provided by Operating Activities $110,000 Cash Flows from Investing Activities Purchase of Property, Plant and Equipment ($100,000) Net Cash Used in Investing Activities ($100,000) Cash Flows from Financing Activities Proceeds from Issuance of Common Stock $50,000 Repayment of Notes Payable ($30,000) Net Cash Provided by Financing Activities $20,000 Net Increase in Cash and Cash Equivalents $30,000 Income Statement December 31st, 2020 Revenue Sales Revenue $500,000 Interest Income $10,000 Total Revenue $510,000 Expenses Cost of Goods Sold ($200,000) Depreciation Expense ($50,000) Salaries and Wages Expense ($100,000) Rent Expense ($30,000) Total Expenses ($380,000) Net Income $130,000
། Debt-to-Equity (D/E) Ratio Equity Ratio Gearing Ratios = Total Debt + Total Equity = Total Shareholders' Equity - Total Assets Debt Ratio = Total Debt + Total Assets Lola's Company Balance Sheet December 31st, 2020 Assets Cash and Cash Equivalents $100,000 Accounts Receivable $150,000 Inventory $200,000 Prepaid Expenses $50,000 Property, Plant and Equipment $500,000 Total Assets $1,000,000 Liabilities Accounts Payable $100,000 Notes Payable $200,000 Accrued Expenses $50,000 Total Liabilities $350,000 Owner's Equity Common Stock $250,000 Retained Earnings $400,000 Total Owner's Equity $650,000 Total Liabilities and Owner's Equity $1,000,000 Statement of Owner's Equity December 31st, 2020 Owner's Equity at Beginning of Year $400,000 Net Income for the Year $130,000 Issuance of Common Stock $50,000 Dividends Paid ($30,000) Owner's Equity at End of Year $550,000 Lola's Company Statement of Cash Flow December 31st, 2020 Cash Flows from Operating Activities Net Income Depreciation Expense $100,000 $50,000 Increase in Accounts Receivable ($30,000) Increase in Inventory Decrease in Prepaid Expenses $10,000 ($20,000) Net Cash Provided by Operating Activities $110,000 Cash Flows from Investing Activities Purchase of Property, Plant and Equipment ($100,000) Net Cash Used in Investing Activities ($100,000) Cash Flows from Financing Activities Proceeds from Issuance of Common Stock $50,000 Repayment of Notes Payable ($30,000) Net Cash Provided by Financing Activities $20,000 Net Increase in Cash and Cash Equivalents $30,000 Income Statement December 31st, 2020 Revenue Sales Revenue $500,000 Interest Income $10,000 Total Revenue $510,000 Expenses Cost of Goods Sold ($200,000) Depreciation Expense ($50,000) Salaries and Wages Expense ($100,000) Rent Expense ($30,000) Total Expenses ($380,000) Net Income $130,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:།
Debt-to-Equity (D/E) Ratio
Equity Ratio
Gearing Ratios
= Total Debt + Total Equity
= Total Shareholders' Equity - Total Assets
Debt Ratio
= Total Debt + Total Assets
Lola's Company
Balance Sheet
December 31st, 2020
Assets
Cash and Cash Equivalents $100,000
Accounts Receivable $150,000
Inventory $200,000
Prepaid Expenses $50,000
Property, Plant and Equipment $500,000
Total Assets $1,000,000
Liabilities
Accounts Payable $100,000
Notes Payable $200,000
Accrued Expenses $50,000
Total Liabilities $350,000
Owner's Equity
Common Stock $250,000
Retained Earnings $400,000
Total Owner's Equity $650,000
Total Liabilities and Owner's Equity $1,000,000
Statement of Owner's Equity
December 31st, 2020
Owner's Equity at Beginning of Year
$400,000
Net Income for the Year
$130,000
Issuance of Common Stock
$50,000
Dividends Paid
($30,000)
Owner's Equity at End of Year
$550,000
Lola's Company
Statement of Cash Flow
December 31st, 2020
Cash Flows from Operating Activities
Net Income
Depreciation Expense
$100,000
$50,000
Increase in Accounts Receivable ($30,000)
Increase in Inventory
Decrease in Prepaid Expenses
$10,000
($20,000)
Net Cash Provided by Operating Activities
$110,000
Cash Flows from Investing Activities
Purchase of Property, Plant and Equipment
($100,000)
Net Cash Used in Investing Activities
($100,000)
Cash Flows from Financing Activities
Proceeds from Issuance of Common Stock
$50,000
Repayment of Notes Payable
($30,000)
Net Cash Provided by Financing Activities
$20,000
Net Increase in Cash and Cash Equivalents
$30,000
Income Statement
December 31st, 2020
Revenue
Sales Revenue $500,000
Interest Income $10,000
Total Revenue
$510,000
Expenses
Cost of Goods Sold ($200,000)
Depreciation Expense ($50,000)
Salaries and Wages Expense ($100,000)
Rent Expense ($30,000)
Total Expenses
($380,000)
Net Income
$130,000
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