Swifty Corporation’s comparative balance sheets are presented below. SWIFTY CORPORATION Balance Sheets December 31 2022 2021 Cash $12,500 $6,100 Accounts receivable 18,400 26,600 Inventory 13,200 10,200 Land 34,200 30,200 Building 76,200 76,200 Accumulated depreciation (17,200) (14,200) Total 137,300 135,100 Accounts payable 19,500 33,300 Common stock ($5 par) 74,500 74,500 Retained earnings 43,300 27,300 Total 137,300 135,100 Swifty’s 2022 income statement included net sales of $122,000, cost of goods sold of $82,000, and net income of $31,000. Compute the following ratios for 2022. (Round Debt to total assets ratio to 1 decimal place, e.g 1.8 and all percentage and days answers to 0 decimal places, e.g 18 or 25% and all other answers to 2 decimal places, e.g. 1.83) Inventory turnover enter the number rounded to 2 decimal places Days in inventory enter the number of days rounded to 0 decimal places Profit margin enter percentages rounded to 0 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.
Swifty Corporation’s comparative balance sheets are presented below.
SWIFTY CORPORATION
Balance Sheets
December 31
2022
2021
Cash
$12,500 $6,100
Accounts receivable
18,400 26,600
Inventory
13,200 10,200
Land
34,200 30,200
Building
76,200 76,200
(17,200) (14,200)
Total
137,300 135,100
Accounts payable
19,500 33,300
Common stock ($5 par)
74,500 74,500
Retained earnings
43,300 27,300
Total
137,300 135,100
Swifty’s 2022 income statement included net sales of $122,000, cost of goods sold of $82,000, and net income of $31,000.
Compute the following ratios for 2022. (Round Debt to total assets ratio to 1 decimal place, e.g 1.8 and all percentage and days answers to 0 decimal places, e.g 18 or 25% and all other answers to 2 decimal places, e.g. 1.83)
Inventory turnover
enter the number rounded to 2 decimal places
Days in inventory
enter the number of days rounded to 0 decimal places
Profit margin
enter percentages rounded to 0 decimal places
%
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