You should use a financial calculator and Excel to solve the problems.
Remember: You must export your table(s) from Excel to Word before submitting your work.
- Discuss the importance of financial statements and how they are used by businesses.
- What is the basic format of the income statement and what is the relevance of the basic categories?
- Cash flows for an organization come from operating activities and investment activities. Discuss the importance of each to the organization.
- The Happy Auto Shop has the following annual information:
What are the shop’s returns and allowances and cost of goods sold?
- Construct a statement of financial position (balance sheet) for the Humperdink family using the following information:
|student loan balance||$6,000|
|stocks and bonds||$2,600|
|automobile loan balance||$12,000|
|401K retirement account||$15,000|
|furniture, clothing, jewelry||$8,000|
|credit card balance||$4,000|
|mortgage loan balance||$99,000|
- What is the purpose of financial statement analysis? How do the three types of financial statement analysis differ from each other and when is each used?
- Samantha Knight is applying for a small-business loan. She provides the bank with the following information:
|cash in checking accounts||$5,000|
|cash in savings||$10,350|
|home market value||$145,500|
|first mortgage on house||$25,000|
|home equity loan limit||$70,000|
|home equity loan||$10,000|
|automobile market value||$19,000|
|automobile loan outstanding||$15,000|
|credit card debt||$1,500|
- Calculate the debt-to-asset ratio.
- Calculate the debt-to-equity ratio.
- What percentage of Samantha’s assets is owned by others?
- Given the profit loss (income statement) and balance sheet for Sam’s Sandwich Delivery (Table 4-8, page 121 of your textbook), answer the following:
- Calculate the following ratios: current, quick, accounts receivable turnover, fixed asset turnover.
- Using the inventory figure on the balance sheet as average inventory, calculate the inventory turnover ratio.
- Calculate the debt-to-equity ratio, debt-to-total asset ratio, and operating profit margin ratio.
- Perform a vertical analysis of the income statement.
- Perform a vertical analysis of the balance sheet.
- Based on your analysis, would you consider investing in Sam’s Sandwich Delivery?