Working Note

1. Sales Revenues
2018: $0 (No sale took place in 2018)
2019: (Number of Units Sold x Average Price) = 250 x $10,000 = $ 2,500,000
2. Cash
2018: Stock Sold + Bank Loan = $750,000 + $50,000 = $800,000
2019: Inventory Sold x Price per Whisky Barrel = 240 x 10,000 = $2,400,000
3. Inventory
2018: Exhibit 3: January 2018 + July 2018 = $300,000 + $325,000 = $625,000
2019: Exhibit 3: January 2019 + July 2019 = $700,000 + $750,000 = $1,450,000
4. Retained Earnings
2018: 2017 Retained Earnings + 2018 Net Income = $0 - $5,000 = $-5,000
2019: 2018 Retained Earnings + 2019 Net Income = -$5,000 + $50,000 = $45,000
5. Cost of goods sold (COGS)
2018: $0
2019: 250 barrels sold (Using FIFO approach: 50 sold in January 2018 @6,000 + 50 sold in June 2018 @
$6,500 + 100 sold in January 2019 @ $7,000 + 50 in July 2019 @ $7,500) = $300,000 + $325,000 +
$700,000 + $375,000 = $1,700,000
6. Operating Expenses
2018: $0
2019: Sum of disused shipyard lease per month + Second-hand equipment lease + Advertisement + and
other expenses in Exhibit 4= ($7,500 x 12) + $50,000 + $75,000 + $230,000 = $445,000
SG&A
2018 = $0
2019 = Sum of Sales Commission + Operating expenses + Salary expenses to Adger + Master distiller = (250
x $9,000) $250,000 + $445,000 + $50,000 = $745,000

Financial Ratio Formular 2018 Value 2019 Value

Analysis

Current Ratio Current 795,000/50,000 15.9 845,000/50,000 16.9

Assets/Current
Liabilities
Quick/Acid- (Current assets- (795,000- 3.4 (845,000- 9.4
test Ratio inventory)/ 625,000)/ 375,000)/50,000
current liabilities 50,000
The Debt-to- Total 50,000/[750,000 0.067 50,000/ [750,000 0,063
Equity Ratio Liabilities/Equity +(5000)] + 45,000]

Debt-to-Assets Total 50,000/795,000 0.063 50,000/845,000 0.059

ratio Liabilities/Asset

The Return on Net Income/Asset (5000)/795,000* 0.63 50,000/845,000*1 5.92

Assets ratio 100 00

The Return on Net Income/Total 5000)/[750,000 -0.67 50000/(750,000+ 6.29%

Equity Ratio Equity +(5000)]*100 45,000)*100
(ROE)

The Gross Gross N/A N/A (800,000/2,500,00 32%

Margin Income/Revenue 0) *100

The Net Net N/A N/A (50,000/2,500,00 2%

Margin Income/Revenue 0) *100

The Assets Revenue/Total N/A N/A 2,500,000/845,00 3.05

Turnover Ratio 0
Asset
The Inventory COGS/Average N/A N/A 1,700,000/(375,0 3.4
Turnover Ratio Inventory 00+625,000/2)