$(3)$

The Business

This practice set is designed in two parts. The first part provides a review of the financial

statements of a corporation selling mini sports balls. Slam, Dunk, Score, Inc.

$\text{'}$

s primary operation is the

sale of mini sports balls with their logos on the balls. A financial analysis and Statement of Cash Flow

will be required. In the second part, Slam, Dunk, Score, Inc. decides to start producing the sports balls

and selling them directly on the Internet.

All cases of academic dishonesty will be reported to the Office of Student Life.

Part One Instructions

The financial information for the past two years

$(2023$

$$and

$2024)$

$$is provided. Using a spreadsheet

application, such as Microsoft Excel, and the information from the previous years, provide the following:

Prepare a Statement of Cash Flow for the current year using the indirect method.

Using horizontal analysis, prepare a Comparative Balance Sheet.

Using vertical analysis, prepare an Income Statement.

Using the textbook, calculate the ratios set out below:

a

$.$

$$Current ratio both years,

$2023$

$$and

$2024$

b

$.$

$$Quick ratio both years,

$2023$

$$and

$2024$

c

$.$

$$Accounts Receivable Turnover

$2024$

$-$

$$company policy is

$12$

$$times per year

d

$.$

$$Number of Days Sales in Receivables

$2024$

$-$

$$company policy is

$30$

$$days

e

$.$

$$Inventory Turnover

$2024$

$-$

$$company policy is

$9$

$$times a year

f

$.$

$$Number of Days Sales in Inventory

$2024$

$-$

$$company policy is

$40\mathrm{.}56$

$$days

g

$.$

$$Ratio of Liabilities to Stockholders' Equity

$2023$

$$and

$2024$

h

$.$

$$Rate earned on Total Assets

$2024$

i

$.$

$$Rate earned on Stockholders' Equity

$2024$

j

$.$

$$Earnings Per Share

$2023$

$$and

$2024$

Acting as an accounting advisor to the firm, take each of the ratios that were calculated above

$($

a

through j

$)$

$$and identify which ratios have improved or need improving. Write Improved or

Needs Improvement next to each ratio once you have compared the ratios from one year to the

other year. On the ratios that can't be compared from one year to another you don't need to

compare. Put this information into the template as shown on page

$17$

$.$

The financial statements provided in this practice set can also be downloaded from Blackboard. An

example of a Statement of Cash Flow has been provided at the end of the Practice Set. Download the

Excel files

$($

Income Statement and Balance Sheet

$)$

$$from Blackboard and add a column and calculate the

ratios for the vertical and horizontal analysis.

Save, print, and upload the following documents to Blackboard by going to the navigation pane

and clicking where it says Practice Set by the assigned date:

student submitted image, transcription available

Slam, Dunk, Score, Inc.

Comparative Balance Sheet

December $31,2024$ and $2023$

Assets $20242023$

Current Assets:

Cash $ $366,520$ $ $90,000$

Accounts Receivable, Net $ $160,000$ $ $170,000$

Merchandise Inventory $ $130,000$ $ $70,000$

Prepaid Rent $ $70,000$ $ $50,000$

Total Current Assets $ $726,520$ $ $380,000$

Property, Plant, and Equipment:

Equipment $ $240,000$ $ $260,000$

Less: Accumulated Depreciation $-$ Equipment $ $(60,000)$ $ $(40,000)$

Total Property, Plant, and Equipment $ $180,000$ $ $220,000$

Total Assets $ $906,520$ $ $600,000$

Liabilities and Stockholders$$ Equity $20242023$

Current Liabilities:

Accounts Payable $ $90,000$ $ $55,000$

Dividends Payable $ $-$ $ $-$

Unearned Revenue $ $20,000$ $ $80,000$

Salaries Payable $ $70,000$ $ $50,000$

Federal Income Taxes Payable $ $30,000$ $ $15,000$

Total Current Liabilities $ $210,000$ $ $200,000$

Long Term Liabilities

Bond Payable $ $20,000$ $ $100,000$

Notes Payable $ $60,000$ $ $-$

Total Liabilities $ $290,000$ $ $300,000$

Stockholders$$ Equity:

Common Stock, $$1$ Par $ $150,000$ $ $100,000$

Paid$-$In Capital in Excess of Par $ $15,000$ $ $10,000$

Retained Earnings $ $451,520$ $ $190,000$

Total Stockholders$$ Equity $ $616,520$ $ $300,000$

Total Liabilities and Stockholders$$ Equity $ $906,520$ $ $600,000$