Philip Spencer, the owner of Wholesome Foods, has hired you to evaluate his firm's financial performance. The firm's financial data is provided below, along with an average for the financial ratios that Spencer collected on several competing peer firms. Assets Cash Accounts receivable nventory Prepaid rent Total current assets Gross property, plant, and equipment Accumulated depreciation Net property, plant, and equipment TOTAL ASSETS 2016 $ 21,000 42,000 51,000 1.200 S 115,200 S 138,300 650,000 (364,000) $286,000 $ 401,200 2018 2017 S 20,200 33,000 84,000 1.100 S 25,000 46,000 96,000 2.000 S 169,000 740,000 (434,000) 306.000 S 475,000 664,000 (394,000) $270000 S 408,300 Debt (Liabilities) and Equity Accounts payable Accrued expenses Short-term notes Total current liabilities Long-tem debt Common stock Retained earrings Total owners equity TOTAL DEBT AND EQUITY 2016 $ 48,000 9,500 2017 S 57,000 9,000 9.000 S 75,000 S 150,000 S 22,200 2018 $ 52,400 12,000 20.000 $ 84,400 S 185,000 $ 34,500 171,100 5 205.600 $ 475,000 11.500 S 69,000 S 160,000 S 22,200 161,100 $ 172,200 $ 183 300 S 408300 150,000 $ 401,200 S ncome Statement Sales Cost of goods sold Gross profits Operating expenses General and administrative expenses Depreciation expense Total operating expenses Dperating profits Interest expense Profits beforetaxes Taxes Net profits Net profits Dividends paid Addition to retained earnings 2018 2017 $ 600,000 50.000) 1487.500) S 140,000 $650,000 S 162,500 $ 30,000 20.000 S 60,000 S 30,000 (10,000) $ 70,000 (27,100) S 42900 S 42,900 31800) $ 11,100 $ 37,500 40.000 S 77,500 S 85,000 (12,000) $ 73,000 (30,000) S 43.000 $ 43,000 33.000) $ 10,000 Financial Ratios (Aveages) Current ratio Retum on assets Dperating profit margin Total asset turnover Debt ratio Retum on equity Peer Companies 180 16.8% 14.0% 120 0.50 18.0% Prepare a cash flow statement for the firm described in Situation 3 for 2017 and 2018.
Philip Spencer, the owner of Wholesome Foods, has hired you to evaluate his firm's financial performance. The firm's financial data is provided below, along with an average for the financial ratios that Spencer collected on several competing peer firms. Assets Cash Accounts receivable nventory Prepaid rent Total current assets Gross property, plant, and equipment Accumulated depreciation Net property, plant, and equipment TOTAL ASSETS 2016 $ 21,000 42,000 51,000 1.200 S 115,200 S 138,300 650,000 (364,000) $286,000 $ 401,200 2018 2017 S 20,200 33,000 84,000 1.100 S 25,000 46,000 96,000 2.000 S 169,000 740,000 (434,000) 306.000 S 475,000 664,000 (394,000) $270000 S 408,300 Debt (Liabilities) and Equity Accounts payable Accrued expenses Short-term notes Total current liabilities Long-tem debt Common stock Retained earrings Total owners equity TOTAL DEBT AND EQUITY 2016 $ 48,000 9,500 2017 S 57,000 9,000 9.000 S 75,000 S 150,000 S 22,200 2018 $ 52,400 12,000 20.000 $ 84,400 S 185,000 $ 34,500 171,100 5 205.600 $ 475,000 11.500 S 69,000 S 160,000 S 22,200 161,100 $ 172,200 $ 183 300 S 408300 150,000 $ 401,200 S ncome Statement Sales Cost of goods sold Gross profits Operating expenses General and administrative expenses Depreciation expense Total operating expenses Dperating profits Interest expense Profits beforetaxes Taxes Net profits Net profits Dividends paid Addition to retained earnings 2018 2017 $ 600,000 50.000) 1487.500) S 140,000 $650,000 S 162,500 $ 30,000 20.000 S 60,000 S 30,000 (10,000) $ 70,000 (27,100) S 42900 S 42,900 31800) $ 11,100 $ 37,500 40.000 S 77,500 S 85,000 (12,000) $ 73,000 (30,000) S 43.000 $ 43,000 33.000) $ 10,000 Financial Ratios (Aveages) Current ratio Retum on assets Dperating profit margin Total asset turnover Debt ratio Retum on equity Peer Companies 180 16.8% 14.0% 120 0.50 18.0% Prepare a cash flow statement for the firm described in Situation 3 for 2017 and 2018.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Philip Spencer, the owner of Wholesome Foods, has hired you to evaluate his firm's financial performance. The firm's financial data is provided below, along with an average for the financial ratios that Spencer collected on several
competing peer firms.
Assets
2016
2017
2018
$ 21,000
$ 20,200
$ 25,000
Cash
Accounts receivable
42,000
33,000
46,000
51,000
1.200
$ 115,200
650,000
(364,000)
$ 286,000
$ 401,200
84,000
1,100
$ 138,300
664,000
(394,000)
$ 270,000
$ 408,300
Inventory
Prepaid rent
96,000
2,000
$ 169,000
740,000
(434,000|
$ 306,000
$ 475,000
Total current assets
Gross property, plant, and equipment
Accumulated depreciation
Net property, plant, and equipment
TOTAL ASSETS
Debt (Liabilities) and Equity
Accounts payable
2016
$ 48,000
9,500
2017
2018
$ 52,400
12,000
$ 57,000
Accrued expenses
9,000
11.500
S 69,000
$ 160,000
$ 22,200
Short-term notes
9,000
$ 75,000
$ 150,000
$ 22,200
20,000
$ 84,400
$ 185,000
$ 34,500
Total current liabilities
Long-tem debt
Common stock
Retained earnings
Total owners' equity
150,000
$ 172,200
$ 401,200
161,100
$ 183,300
$ 408,300
171,100
$ 205,600
$ 475,000
TOTAL DEBT AND EQUITY
Income Statement
2017
$ 600,000
(460,000)
$ 140,000
2018
$650,000
(487,500)
$ 162,500
Sales
Cost of goods sold
Gross profits
Operating expenses:
General and administrative expenses
$ 30,000
30,000
$ 60,000
$ 80,000
(10,000)
$ 70,000
(27,100)
S 42,900
$ 42,900
31,800
$ 11,100
$ 37,500
40,000
Depreciation expense
$ 77,500
$ 85,000
(12,000)
$ 73,000
(30,000)
S 43,000
$ 43,000
33,000)
$ 10,000
Total operating expenses
Operating profits
Interest expense
Profits beforetaxes
Тахes
Net profits
Net profits
Dividends paid
Addition to retained earnings
Financial Ratios (Averages)
Peer Companies
Current ratio
1.80
Retum on assets
16.8%
Operating profit margin
Total asset turnover
14.0%
1.20
Debt ratio
0.50
Retum on equity
18.0%
Prepare a cash flow statement for the firm described in Situation 3 for 2017 and 2018.
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