Q16. Cooley Textile’s 2000 financial statements are shown below.
| Balance Sheet | |||
| Assets | $ (000) | Liabilities & Equity | $ (000) |
| Cash (3%) | 1,080 | Accounts payable (20%) | 4,320 |
| Accounts receivable (18%) | 6,480 | Accruals (7%) | 2,880 |
| Inventory (25%) | 9,000 | Notes payable | 2,100 |
| Total current assets | 16,560 | Total current liabilities | 9,300 |
| Fixed assets (35%) | 12,600 | Mortgage Bonds | 3,500 |
| Total debt | 12,800 | ||
| Common stock | 3,500 | ||
| Retained earnings | 12,860 | ||
| 29,160 | 29,160 |
| Income Statement | |
| $ (000) | |
| sales | 36,000 |
| Operating cost (90.11%) | 32,440 |
| EBIT | 3,560 |
| Interest | 560 |
| EBT | 3,000 |
| Tax (40% of EBT) | 1,200 |
| Net income | 1,800 |
| Dividend (45% of net income) | 810 |
| Retained earnings | 990 |
Suppose 2001 sales are projected to increase by 15% over 2000 sales. Assume that the company was operating at full capacity in 2000, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also assume that assets, spontaneous liabilities, and operating costs are expected to increase in proportion to sales. Use the percentage of sales method to develop a pro forma balance sheet and income statement for December 31, 2001. Use the pro forma income statement to determine the addition to retained earnings. Interest, Mortgage Bonds and Common Stocks will remain content.
Q17.
| Balance Sheet | |||
| Assets | $ (000) | Liabilities & Equity | $ (000) |
| Cash (5%) | 1,800 | Accounts payable (20%) | 7,200 |
| Accounts receivable (30?%) | 10,800 | Accruals (7%) | 3,472 |
| Inventory (35%) | 12,600 | Notes payable | 2,520 |
| Total current assets | 25,200 | Total current liabilities | 13,192 |
| Fixed assets (60%) | 21,600 | Mortgage Bonds | 5,000 |
| Total debt | 18,192 | ||
| Common stock | 2,000 | ||
| Retained earnings | 26,608 | ||
| 46,800 | 46,800 |
| Income Statement | |
| $ (000) | |
| sales | 36,000 |
| Operating cost (85.5%) | 30,783 |
| EBIT | 5,217 |
| Interest | 1,017 |
| EBT | 4,200 |
| Tax (40% of EBT) | 1,680 |
| Net income | 2,520 |
| Dividend (45% of net income) | 1,512 |
| Retained earnings | 1,008 |
Suppose 2001 sales are projected to increase by 20% over 2000 sales. Assume that the company was operating at full capacity in 2000, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also assume that assets, spontaneous liabilities, and operating costs are expected to increase in proportion to sales. Use the percentage of sales method to develop a pro forma balance sheet and income statement for December 31, 2001. Use the pro forma income statement to determine the addition to retained earnings. Interest, Mortgage Bonds and Common Stocks will remain content.
Q18. Using the data below calculate the firm’s current and quick ratios for each year.
| ITEM | 2006 | 2007 | 2008 | 2009 |
| TOTAL CURRENT ASSETS | 16,950 | 21,900 | 22,500 | 27,000 |
| TOTAL CURRENT LIABELITIES | 9,000 | 12,600 | 12,600 | 17,400 |
| INVENTORY | 6,000 | 6,900 | 6,900 | 7,200 |
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