Please I need Help with: BM155 Project 5

Managing and Interpreting Key Financial Information & Statements

Project Description:

T & T, Inc. is an up-and-upcoming small business that makes widgets. As a founding partner in this small business, you are responsible for managing the companys financials. To help you complete this responsibility, use the information you learned in Chapter 10 and 11 on understanding a companys finances.

Using the Project 5 Supplement Data Sheet, compose the Income Statement for the fiscal year of 2018 and balance sheet for December 31, 2018.

Form the income statement, calculate the gross profit margin, operating profit margin, and the net profit margin for T & T, Inc.

After creating both financial statements, calculate the current ratio, return on assets, debt ratio, & return on equity for T & T, Inc.

Using the Project 5 Supplement Data Sheet, compose the three-month cash budget for T & T, Inc. for January, February, & March 2019.

Type up your income statement (with all 3 required margin percentages), balance sheet, current ratio, return on assets, debt ratio, return on equity, and three-month cash budget in an Excel file.

Project #5 Supplement Data Sheet - Managing and Interpreting Key Financial Information & Statements

Company Name: T & T, Inc.

Type of Business: Manufacturer (producer)

Product: Widget

Income statement related financial information:

Sales of product

• Widgets are sold for $30 individually, In 2018 70,000 units were sold Cost of goods sold

• 1 widget costs $15 to make Operating Expenses
• Billboard in downtown Chicago - $10,000 monthly
• Print Ads on the CTA - $3,000 monthly
• Administrative costs - $5000 monthly
• Selling expense - $12,000 monthly
• Salary expense - $50,000 monthly
• Depreciation of truck - $500 monthly (life of 6 years) Interest Expense

• Mortgage $2,000 monthly
• Equipment loan interest $500 monthly Income Tax
• 22% annually on profits b4 tax Dividend of $10,000 paid Balance sheet related financial information: Current assets
• Cash $150,000
• Accounts Receivable $450,000
• Inventory $300,000 Fixed assets

• New manufacturing equipment $50,000
• New facility - building & land $250,000 (**T & T, Inc. invested $50,000 cash as down payment, remaining funds came from a bank mortgage) Other assets

• T & T, Inc. holds a manufacturing process patent $150,000 Short-term debt
• Account Payable $200,000
• Accrued Expense $25,000
• Short-term note $50,000 Long-term debt

• Mortgage $200,000
• Long-term note $50,000 Equity

• Common stock $787,880
• Retained earnings $37,120 Cash budget related financial information: Historical sales, sales projections, inventory costs

2018 Historical Sales Data		2019 Predicted Sales Data
November	$75,000	January	$100,000
December	$75,000	February	$180,000
		March	$180,000
		April	$190,000
		May	$250,000

Percentage of collections AR

• Of T & T, Inc.s sales, 40% is collected in the month of the sale, 30% is collected in the following month, and the remaining 30% is collected in the month after that. Inventory costs & schedule
• Inventory will be purchased 1 month in advance of sale, but will be paid in the month of the sale.
• Inventory costs will be 60% of following months expected sales. Operating Cash Disbursements:

• Billboard in downtown Chicago - $10,000 monthly
• Print Ads on the CTA - $3,000 monthly
• Administrative costs - $5000 monthly
• Selling expense - $12,000 monthly
• Salary expense - $50,000 monthly
• Utilities Cost is 2% of current months sales paid for in the same month Cash Flows from Operations:

• To boost cash flow to start the new fiscal year of 2019, common stock is sold for $100,000
• To expand manufacturing capacity for peak production times during early summer, T & T, Inc. will invest in renovations to their facility for $15,000 in March.
• To go along with the expanded capacity of facility, T & T, Inc. will purchase additional equipment for $10,000 in March. Key Financial Ratios:

1. To understand the liquidity of T & T, Inc. calculate the current ratio. (Industry avg. 2.2)
2. To understand T & T, Inc.s profitability on its assets calculate the return on assets (ROA). (Industry avg. 12%)
3. To understand the use of debt by T & T, Inc. calculate the debt ratio. (Industry avg. 50%)
4. To find out the rate of return (ROR) earned by the owners on their equity investment in T & T, Inc. calculate the return on equity (ROE). (Industry avg. 10%)

BM155 Financial Services: Project 5