INCOME STATEMENT Sales Cost of Goods Sold Gross Profit Selling Expense General & Administrative Depreciation $...

  

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INCOME STATEMENT Sales Cost of Goods Sold Gross Profit Selling Expense General & Administrative Depreciation $ 5,234,198 3,659,135 1,575,063 227,295 626,000 176,000 Bank Interest on Loan 147,500 Total Operating Expense 1,176,795 Operating Profit Less Income Tax (25%) Net Profit after Tax Dividends Paid (100k shares) BALANCE SHEET 398,268 99,567 298,701 100,000 Cash $ 165,852 Accounts Payable S 496,231 Accounts Receivable 589,367 Long-Term Debt 2,950,000 Inventory 1,765,129 Plant & Equipment 5,500,000 Common Stock 2,000,000 Less Depreciation 1,100,000 Retained Earnings 1,474,117 Net Plant & Equipment 4,400,000 Total Equity 3,474,117 Total Assets $ 6,920,348 Total Liability & Equity S 6,920,348 Current Share price for 100,000 shares issued: $25 1. Use the financial statements above to calculate the following measures: Measure 1. Current Ratio 2. Debt to Equity Ratio 3. Gross Margin 4. Return on Sales (ROS) 5. Return on Equity (ROE) 6. Earnings per Share (EPS) 7. Price Earnings Ratio (PE) Formula Current assets/current liabilities Total debt/total equity Gross profit / sales Net profit/ sales Net profit/total equity Net profit/ shares outstanding Share Price / EPS Value 2. Calculate the value of this business using the following simplified (rule of thumb) measures: Measure 1. Cash Flow 2. Earnings Multiplier 3. Market Value 4. Book Value Formula 3 x (Net Profit + Depreciation + Bank Interest) 5x EPS x Shares Outstanding Share price x Shares Outstanding Assets - Liabilities Value How can you explain the differences in the valuation of the business? Which makes the most sense to you? INCOME STATEMENT Sales Cost of Goods Sold Gross Profit Selling Expense General & Administrative Depreciation $ 5,234,198 3,659,135 1,575,063 227,295 626,000 176,000 Bank Interest on Loan 147,500 Total Operating Expense 1,176,795 Operating Profit Less Income Tax (25%) Net Profit after Tax Dividends Paid (100k shares) BALANCE SHEET 398,268 99,567 298,701 100,000 Cash $ 165,852 Accounts Payable S 496,231 Accounts Receivable 589,367 Long-Term Debt 2,950,000 Inventory 1,765,129 Plant & Equipment 5,500,000 Common Stock 2,000,000 Less Depreciation 1,100,000 Retained Earnings 1,474,117 Net Plant & Equipment 4,400,000 Total Equity 3,474,117 Total Assets $ 6,920,348 Total Liability & Equity S 6,920,348 Current Share price for 100,000 shares issued: $25 1. Use the financial statements above to calculate the following measures: Measure 1. Current Ratio 2. Debt to Equity Ratio 3. Gross Margin 4. Return on Sales (ROS) 5. Return on Equity (ROE) 6. Earnings per Share (EPS) 7. Price Earnings Ratio (PE) Formula Current assets/current liabilities Total debt/total equity Gross profit / sales Net profit/ sales Net profit/total equity Net profit/ shares outstanding Share Price / EPS Value 2. Calculate the value of this business using the following simplified (rule of thumb) measures: Measure 1. Cash Flow 2. Earnings Multiplier 3. Market Value 4. Book Value Formula 3 x (Net Profit + Depreciation + Bank Interest) 5x EPS x Shares Outstanding Share price x Shares Outstanding Assets - Liabilities Value How can you explain the differences in the valuation of the business? Which makes the most sense to you?

Answer rating: 100% (QA)

To calculate the measures we will use the given financial statement data Current Ratio Current Ratio Current Assets ... View the full answer