Question 3)
The Good Food Company has been a business in Sault Ste. Marie for 20 years. The following financial statement that includes the balance sheet and income statement is as follows for year 2022:
Income Statement For 2022 – The Good Food Company
Sales$5,000,000
Cost of Goods Sold$2,800,000
Gross Profit$2,200,000
Selling & Administration Expenses$1,600,000
Depreciation Expense$200,000
Operating Income$400,000
Interest Expense$50,000
Tax Expense$100,000
Net Income ?
Balance Sheet For 2022 – The Good Food Company
Cash$50,000
Accounts Receivable$560,000
Inventory$200,000
Fixed (Long Term) Assets$1,000,000
Accumulated Depreciation($200,000)
Total Assets ?
Account Payables$460,000
Bank Mortgage$500,000
Equity ?
Total Liabilities and Equity?
Required
a) Calculate the net income, then the total current assets, fixed (long term) assets, total assets, current liabilities, long term liabilities, equity, and total liabilities & equity.
b) Calculate the following ratios and after each ratio calculation provide a comment with respect to the financial strength of the ratio:
• The current and quick ratio.• The total debt to equity ratio.• The A/R (accounts receivable) turnover and A/R collection period. The inventory turnover and the inventory holding period. The company offers all customers 30 days to pay and the company prefers to have 20 days of inventory on hand. Use sales in your calculation.
It’s that simple.Pay only when you are satisfied.
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