l-Itihad Corporation Balance SheetDecember 31, 2019AssetsLiability & EquityCurrent AssetsCurrent LiabilityCash$5,000Accounts payable22,000Short term securities10,000Accrual Account8,000Account Receivables30,000Short term debt6,000Inventory32,000Total Current Liability36,000Long-term debt40,000Total Current Assets77,000TotalLiability76,000Long term AssetsEquityNet Property & equipment70,000CommonStocks64,000Retained earnings17,000Total Equity81,000Total Liability and Equity157,000Other assts 10000Total Assets157,000Sur Corporation Income StatementDecember 31, 2019Other Financial information of Sur corporation December 31, 2019Net sales (revenue)$150,000· Average Number of Common shares outstanding 16,000 Shares· Market price of Common share $3.5Cost of goods sold80,000Gross profit70,000Operating expenses30,000EBIT- (Operating profit)40,000Interest expense10,000EBT- ( Earnings before taxes)30,000Income tax 10,000Net Income (net profit)20,000You have to find the following ratios for Al-Itihad Corporation, each one carryAverage collection periodDays sales in inventoryDays payable outstanding
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.
l-Itihad Corporation
December 31, 2019
Assets
Liability & Equity
Current Assets
Current Liability
Cash
$5,000
Accounts payable
22,000
Short term securities
10,000
Accrual Account
8,000
Account Receivables
30,000
Short term debt
6,000
Inventory
32,000
Total Current Liability
36,000
Long-term debt
40,000
Total Current Assets
77,000
Total
Liability
76,000
Long term Assets
Equity
Net Property & equipment
70,000
Common
Stocks
64,000
17,000
Total Equity
81,000
Total Liability and Equity
157,000
Other assts
10000
Total Assets
157,000
Sur Corporation Income Statement
December 31, 2019
Other Financial information of Sur corporation December 31, 2019
Net sales (revenue)
$150,000
· Average Number of Common shares outstanding 16,000 Shares
· Market price of Common share $3.5
Cost of goods sold
80,000
Gross profit
70,000
Operating expenses
30,000
EBIT- (Operating profit)
40,000
Interest expense
10,000
EBT- ( Earnings before taxes)
30,000
Income tax
10,000
Net Income (net profit)
20,000
You have to find the following ratios for Al-Itihad Corporation, each one carry
Average collection period
Days sales in inventory
Days payable outstanding
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