This ratio determines the rate and ability in which the company is able to pay its debts off. For Huffman Trucking the calculation would look like this for 2011: $94,520/$466 = 202.83 (Huffman Trucking, 2013). Liabilities and Shareholders' Equity Current Liabilities Accounts Payable $40,843 $45,381 Salaries & Wages 37,299
Our Total Current Liabilities are as follows: Accounts Payable 96,500 Sales Tax Payable 3,950 Payroll Tax Payable 15,840 and our Total Long Term Liabilities are the following: Long Term Notes Payable 630,000 Therefore, the Total Liabilities we have is $ $746,290 and our Total Assets is $2,675,250. 746,290 / 2,675,250 = 0.27 or 27%. The Acid Test Ratio or Quick Ratio for the company is computed as follows: Cash $1,430,000 Accounts Receivable $86,000 Short Term Investment $0 = $1,516,000 Current Liabilities $116,290 $1,516,000/$116,290 = 13.036 or 13.07 With this result, our financial statement is showing that our company can immediately convert a portion of our assets into cash to pay our short term debts. The Inventory Turnover of the company is computed as follows: Cost of Goods Sold $8,474,831 Less: Ending Inventory $429,090 $8,474,831/$429,090 = 19.75 or 19.8 times The Receivables Turnovers of the company is computed as follows: Total Net Sales $10,796,200 Accounts Receivable $86,000 $10,796,200/$86,000 = 125.5 times MY SHARE OF THE MEMO This memo is to discuss the liquidity ratio that was performed recently in regards to Kudler Fine Foods. The liquidity ratio that was performed indicated that the amount of the company’s
What are the incremental cash flows for the project in years 1 through 5 and how do these cash flows differ from accounting profits or earnings? In business finance there are a number of different cash flows. Caledonia will use the following incremental cash flows for this project in years 1 through 5: Net initial investment outlay. The is outlay is comprised of cash expenditures, changes in net working capital, net cash flow from the sale of existing or old and non-useful equipment, and investment tax credits. Net operating cash flow.
1) What are the three sections of a Cash Budget, and what is included in each section? The three sections of a Cash Budget are; Cash receipts, Cash disbursements, and Financing. A cash budget allows you to estimate and track all of the money that comes into and leaves your business. Cash Receipts are any monies your business takes in, such as sales receipts. Cash disbursements show where you must spend some of your money, such as on employee pay, raw materials purchases, and manufacturing overhead costs Financing shows expected payments and the repayments of the borrowed funds plus interest.
Accounting 300 Learning Team Week 2 4. Indicate how each business transaction affects the basic accounting equation. (a) Paid cash for janitorial services. Decrease Cash Increase Liabilities (b) Purchased equipment for cash. Decrease Cash Increase Assets (c) Issued common stock to investors in exchange for cash Increase Cash Decrease in Stock Equity.
The second ratio measures the effect of interest; it indicates the proportion of earnings before interest and tax that is retained after paying interest. It should be considered together with the leverage component (assets/equity). The third ratio measures the company’s operating profit on sales; it can be broken down into subcomponents such as gross profit margin. Common-sized income statements can help with
1. Provide the definitions of throughput, inventory and operational expense given in The Goal. How do they compare with the traditional definitions? Do you find them useful, and why? Throughput is the rate at which the system generates money through sales while inventory is all the money that the system has invested in purchasing things which it intends to sell.
only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements. B. the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold C. a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline. D. there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale. 15) Designated market value A. may sometimes exceed net realizable value. B. should always be equal to net realizable value less a normal profit margin.
The debt ratio is total debt divided by total assets. It provides owners with information on how much debt financing is being use to purchase assets. The lower percentages indicate a company finances business operations through cash rather than debt. (Vitez) The debt-to-equity ratio is total debt divided by total equity. This calculates how much of the business is financed through private investors; it is also expressed in percentage form.
Financial Statement Report ACC/290 06/03/2013 Lisa Henderson Financial statement is an expression used when referring to end of the month reports such as an income statement, balance sheet, cash flow statement, and Retained Earnings Statement. These statements are also known as the final accounts. The income statement is a financial statement that aids in estimating the gross and net profit of a business for a specific time period. Many companies put together income statements so they can evaluate proceeds with expenditures to verify their performance. If the income of the business is more than the expenses then the company has made money and vice versa.