Year 4 Year Revenues Net sales Other revenues $211,900 $176, 100 9,100 221, 000 6,700 Total revenues 182,800 Expenses Cost of goods sold Selling expenses General and administrative 124, 200 20, 100 102, 200 18, 100 9,800 8,800 expenses Interest expense Income tax expense Total expenses 2,000 17, 100 148, 200 $ 45,000 $ 34,600 2,000 19,900 176, 000 Net income Assets Current assets Cash Marketable securities Accounts receivable Inventories $ 4,800 $ 6,800 2,700 36,900 101,300 3,800 149,500 105,500 20,700 $275, 700 $244, 100 2,700 31,400 94,900 2,800 Prepaid expenses Total current assets Plant and equipment (net) Intangibles Total assets 138,600 105,500 Liabilities and Stockholders' Equity Liabilities Current liabilities Accounts payable Other Total current liabilities Bonds payable $ 38, 100 $ 54,600 15,000 53,100 65,000 118, 100 16,400 71,000 66,000 Total liabilities 137,000 Stockholders' equity Common stock (47,000 shares) 113,300 Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 44, 300 157,600 $275, 700 $244,100 113,300 (6, 200) 107, 100 Required Calculate the following ratios for Year 3 and Year 4. Since Year 2 numbers are not presented do not use averages when calculating the ratios for Year 3. Instead, use the number presented on the Year 3 balance sheet. a. Net margin. (Round your answers to 2 decimal places.) b. Return on investment. (Round your answers 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.
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