The following data on several transactions of ABC company for 2017 is available below. A company manufactured 20000 units of output, but sold only 14000 units. There was no beginning inventory.

• Sales revenue was 930 mln USD, 60 mln of which led to the increase in accounts receivable in 2017.
• Direct materials costs and manufacturing processing costs taken together were 400 mln USD, while direct labor costs were 40 mln USD.
• ABC received dividends on the stocks of another company that ABC owns in the amount of 3 mln USD.
• ABC purchased a building in the amount of 4 mln USD.
• Selling and general expenses were 20 mln USD and 70 mln USD respectively. They were paid in the amount of 60% in 2017.
• ABC accrued 8% interest on the long-term loan (300 mln USD) available at the beginning of the year in 2017.
• ABC granted a loan to XYZ company in the amount of 20 mln USD.
• ABC paid off a long-term bank loan in the amount of 100 mln USD.
• The income tax rate was 20%.

Balance sheet data as of December, 31, 2017 (in mln USD) is also available.

Long-term investments 100; PPE (net value) 250; inventory 140; accounts receivable 400; cash 60; retained earnings 280; long-term loans 400; accounts payable 260; common stock 10.

Required:

Prepare income statement of ABC company for 2017 (indicate all the lines)

Determine the type of financial solvency position of ABC company at the end of 2017. Show calculations.

Compute current ratio and interest coverage ratio of ABC company at the end of 2017. Indicate if they correspond to recommended values.

Answer rating: 100% (QA)

Ans 1 Here is the income statement of ABC company 2017 2 For company financial solvency position liq... View the full answer