INCOME STATEMENT

GOLD EQUIPMENT COMPANY

FOR THE YEAR ENDED DECEMBER 31

Sales (all on credit) $600,000

Less: Cost of goods sold 460,000
Gross profit $140,000

Less: Operating expenses

General and administrative expense $30,000
Depreciation 30,000
Total: $60,000
Operating profit 80,000
Less: Interest 10,000
Net profit before taxes $70,000
Less: Taxes 27,100
Net profit after taxes $42,900
Less: Cash dividends 20,000
To retained earnings $22,900
 BALANCE SHEET
GOLD SHIPMENT COMPANY
DECEMBER 31

Assets
Cash $15,000
Marketable securities 7,200
Accounts receivable 33,000
Inventory 82,000
Prepaid rent 1,100
Total current assets $138,300
Net plant and equipment $270,000
Total assets $408,300
Liabilities

Accounts payable $57,000

Notes payable 13,000
Accounts 5,000
Total current liabilities $75,000
Long -term debt $150,000
Stockholder’s equity
Common stock equity (20,000 shares outstanding) $110,200
Retained earnings 73,100
Total stockholder’s equity $183,300
Total liabilities and stockholder’s equity $408,300
Ratio Industry Gold Equipment
average Company

Net Working Capital $125,000 $63,300

Current Ratio 2.35 1.84
Quick Ratio .87 .75
Inventory Turnover 4.55 5.61
Average Collection Period 35.3 days 20.1 days
Fixed Asset Turnover 1.97 2.22
Total Asset Turnover 1.09 1.47
Debt Ratio .30 .55
Debt-equity Ratio .62 .82
Times Interest Earned Ratio 12.3 8
Gross Profit Margin .202 .233
Operating Profit Margin .135 .133
Net Profit Margin .091 .072
Return on Investment (ROI) .099 .105
Return on Equity (ROE) .167 .234
Earnings Per Share (EPS) $3.10 $2.15