case study 1 Please be informed that this is strictly an individual assignment. Please highlight your answers in the multiple-choice questions. Once you are done with inserting your answers in this file, please make sure they are correctly saved and then upload the word file to the folder on blackboard you initially downloaded it from (Course materials/ case study 1). Make sure that you upload your file before the due date (Monday, Sep 20th) following is the balance sheet for Excel Inc. for the year ended Dec 31st, 2018. Assets Current Assets Cash Accounts Receivables Inventory Total Current Assets Consolidated Balance sheet Excel inc. As of Dec 31st, 2018 Liabilities + Owners Equity Current Liabilities 40,000 Accounts Payable 12,000 4,000 Notes Payable 6,000 14,000 Accrue Wages 1000 58,000 Total Current Liabilities 19,000 Long term debt 40,000 56,000 Fixed Assets Property, Plant, and Equipment Goodwill Total Fixed Assets 24,000 80,000 Owners' equity Common Shares Retained Earnings Total Owners equity Liabilities + O.E 40,000 39,000 79,000 138,000 Total Assets 138,000 In addition to that, you know the following facts about firm's operations throughout the year: revenues for the year includes the following: Domestic revenues $160,000. International revenues $80,000. cost of sales and direct labor is 50% of annual revenues. . In addition to that, you know the following facts about firm's operations throughout the year: revenues for the year includes the following: Domestic revenues $160,000. International revenues $80,000. cost of sales and direct labor is 50% of annual revenues. Because of the strong competition that it faces, Excel Inc. has a generous marketing plan. They signed a contract with the marketing planet Inc. by which the marketing agency will be responsible for Excel Inc, marketing for five years period started this year. The contract costs Excel $100,000 that will be paid evenly over the next five years, the company thinks this plan will affect its sales evenly over the five years period. Excel Inc. also spends $30,000 in the form of general and administrative expenses per year. The depreciable assets historical value is $40,000 and is depreciated on a straight-line basis over 10 years. Excel pays 10% interest rate on its Long-term debt outstanding. Excel pays 40% of its taxable income as tax expense. 1 . Out of the year's net income, Excel Inc. is planning to repay $30,000 to its shareholders in the form of cash dividends. The company currently has 60,000 shares outstanding Please set up the income statement for Excel Inc: Out of the year's net income, Excel Inc. is planning to repay $30,000 to its shareholders in the form of cash dividends. The company currently has 60,000 shares outstanding Please set up the income statement for Excel Inc: Consolidated Income Statement Excel Inc. As of Dec 31st, 2018 Revenues (-) Cost of goods sold Gross margin (-) Marketing expenses (-) General and administrative expenses (-) Depreciation EBIT - Interest expenses - Tax expenses Net income Dividends Additions to Retained Earnings 1- Ms. Janet McInish works as an elementary school teacher and has a taxable income from her job of $35,000. She inherited 10% of Excel shares outstanding, and recently received her annual dividends. What is the amount of annual dividends received by Mrs. McInish? 7- Do you agree with Mr. David's opinion? Or, With the BOD? And why? Knowing that industry average inventory turnover is 8. a) I agree with Mr. David because the company's current inventory turnover is larger than the industry average. b) I agree with Mr. David because the company's current inventory turnover is lower than the industry average. c) I agree with BOD because the company's current inventory turnover is lower than the industry average. Alternatively, assume that the entire debt taken will be invested in assets (half on inventory and half on land). The BOD believes this step will increase sales by $20,000 next year which they think certainly justifies the decision to increase inventory. Mr. David argues that this sales increase is not enough to balance the drop in firm's total asset utilization. 8- what is the current total asset utilization? (before the loan) a) 1.74 b) 1.16 c) 0.08 d) 2.74 9. What is the new total assets utilization? a) 1.19 b) 1.46 c) 1.34 d) 1.94 10- Do you agree with Mr. David? Or with the BOD? a) I agree with Mr. David b) I agree with BOD