- Prepare the income statement for 2021 and 2020,Based on your financial statements
- Complete the following activities in good form. Use excel or word only. Please do not use any other format such as PDF. Provide all supporting calculations to show how you arrived at your number
Finance data of Adams Stores, Inc. for the year ending 2021 and 2020
Items | 2021 | 2020 |
Sales | $6,034,000 | $3,432,000 |
Cash | 7,282 | 57,600 |
Other Expenses | 519,988 | 358,672 |
Retained Earnings | 32,592 | 203,768 |
Long-term debt | 723,432 | 323,432 |
Cost of goods sold | 5,528,000 | 2,864,000 |
Depreciation | 116,960 | 18,900 |
Short-term investments | 0 | 0 |
Gross Fixed Assets | 1,202,950 | 491,000 |
Interest Expenses | 136,012 | 43,828 |
Shares outstanding | 100,000 | 100,000 |
Market Price of stock | 2.25 | 8.50 |
Accounts Receivable | 632,160 | 351,200 |
Accounts payable | 524,160 | 145,600 |
Inventory | 1,287,360 | 715,200 |
Notes Payable | 636,808 | 200,000 |
Accumulated Depreciation | 263,160 | 146,200 |
Accruals | 489,600 | 136,000 |
Tax Rate40%40%
Stock Price$5.50$7.25
Instructions:
Complete the following activities using the financial information above:
Part 1: Financial Statements
- Prepare the income statement for 2021 and 2020. Include statement of retained earnings for 2021. The company paid $0.11 dividend per share in 2021.
- Prepare the balance sheet for 2021 and 2020
- Prepare Common-Size financial statements for the income statement and balance sheet for 2021 and 2020
- Prepare Statement of Cash Flows for 2021
Part 2: Financial Statement Analysis
- Based on your financial statements (from Part 1), calculate the following ratios for the two years. Show all your calculations in good form. Show your formulas. If you use excel, each calculation need to show the excel formula
- Comments on each of the ratios by comparing 2021 to 2020 ratios. In your comments, explain the meaning of each of the ratios.
- Find industry ratios for 2021 similar to the ones you calculated. Compare the industry ratios you found to the ratios you calculated. Based on the industry average, how is Adams Stores, Inc. doing financially?
- Please organize and group your ratios and calculations as follows:
Current ratio
Quick ratio
Inventory turnover (times)
Accounts receivable turnover (days)
Total asset turnover (times)
Debt ratio
Times interest earned
Gross profit margin
Net profit margin
Return on total assets
Return on equity
P/E ratio
Return on equity using DuPont Analysis
Liquidity ratios | |
Current Ratio | |
Quick Ratio | |
Asset Management ratios |
|
Inventory Turnover | |
Accounts Receivable Turnover | |
Fixed Asset Turnover | |
Total Asset Turnover | |
Debt Management ratios |
|
Debt Ratio | |
Times Interest Earned | |
Profitability ratios | |
Profit Margin
Return on Assets Return on Equity (using DuPont) Market Value ratios Price-to Earnings Ratio |