Baron Coburg

Balance Sheet
A snapshot of the financial position of the
company
Composed of the following parts
Current assets: assets which are expected to be
consumed within the normal operating period
Noncurrent assets: other valuable resources
Liabilities: obligations to outside parties who have
furnished the company with resources
Equity: amount of resources invested by owner
Income Statement
Report that summarizes the revenues and
expenses during an accounting period
Composed of the following parts
Revenue: Inflow of assets (normally resulting from
sales)
Cost of sales: Cost of goods of services sold, usually
associated with an inventory decrease
Gross margin: Revenue less cost of sales
Operating expenses: Other expenses
Net Income: Gross margin less operating expenses
Dividends: Amounts paid out to owners and
shareholders
Retained Earnings: Income that is reinvested in the
company
Question 2
Ivans net income is greater than
Fredericks (214 bushels vs. 122 bushels)
Additionally, the return on investment
(ROI) for Ivans farm is better, meaning he
makes better use of the assets he was
given.
ROI = Net Income / Investment
The ROI for Ivans farm is 132% while the
ROI for Fredericks farm is only 120%.