Balance Sheet

Marlin Tuna
BALANCE SHEET
December 31

	Year 2	Year 1
Current assets:
Cash and cash equivalents	$ 75,000	$ 52,500
Trading securities (at fair value)	112,500	97,500
Accounts receivable	450,000	435,000
Inventory (at lower of cost or market)	435,000	412,500
Total current assets	1,072,500	997,500
Investments available-for-sale (at fair value)	525,000	450,000
Fixed assets:
Property, plant, and equipment (at cost)	2,850,000	2,800,000
Less: accumulated depreciation	(577,500)	(525,000)
Total fixed assets	2,272,500	2,275,000
Total assets	$3,870,000	$3,722,500
Current liabilities:
Accounts payable	$ 225,000	$ 187,500
Notes payable	435,000	510,000
Accrued and other liabilities	330,000	300,000
Total current liabilities	990,000	997,500
Long-term debt:
Bonds and notes payable	975,000	1,000,000
Total liabilities	1,965,000	1,997,500
Stockholders' equity:
Common stock ($7.50 par value; 100,000 shares outstanding)	775,000	750,000
Additional paid-in capital	525,000	525,000
Treasury stock	(25,000)	0
Retained earnings	630,000	450,000
Total equity	1,905,000	1,725,000
Total liabilities and equity	$3,870,000	$3,722,500

Statement of Income and Retained Earnings

Marlin Tuna

STATEMENT OF INCOME AND RETAINED EARNINGS

For the Year Ended December 31, Year 2

Net Sales $2,700,000

Operating expenses:

Cost of sales
$1,500,000

Selling and administrative expenses
677,955

Depreciation
52,500

Total operating expenses
(2,230,455)

Operating income 469,545

Interest expense (15,000)

Income before income taxes 454,545

Income taxes (154,545)

Net income 300,000

Retained earnings, January 1, Year 2
450,000

Cash dividends, paid August 4, Year 2
(120,000)

Retained earnings, December 31, Year 2
$ 630,000

Analytics Definitions

Accounts receivable turnover	Sales (net) Average accounts receivable (net)
Asset turnover	Sales (net) Average total assets
Basic earnings per share	Income available to common shareholders Weighted average common shares outstanding
Cash conversion cycle	Days sales in accounts receivable + Days in inventory – Days of payables outstanding
Current ratio	Current assets Current liabilities
Days in inventory	Ending inventory Cost of goods sold / 365
Days of payables outstanding	Ending accounts payable Cost of goods sold / 365
Days sales in accounts receivable	Ending accounts receivable (net) Sales (net) / 365
Debt to equity	Total liabilities Total equity
Dividend payout	Cash dividends Net income
Equity multiplier	Total assets Total equity
Gross margin (Gross profit margin)	Sales (net) – Cost of goods sold Sales (net)
Inventory turnover	Cost of goods sold Average inventory
Operating cash flow ratio	Cash flow from operations Ending current liabilities
Price earnings ratio	Price per share Basic earnings per share
Profit margin	Net income Sales (net)
Quick ratio	Cash and cash equivalents + Short-term marketable securities + Receivables (net) Current liabilities
Return on assets	Net income Average total assets
Return on equity	Net income Average total equity
Return on sales	Income before interest income, interest expense, and taxes Sales (net)
Times interest earned	Income before interest expense and taxes Interest expense OR Earnings before interest and taxes Interest expense
Total debt ratio	Total liabilities Total assets

Ratio	Year 1	Year 2	Audit Finding
Accounts receivable turnover	6.50
Inventory turnover	3.20
Gross profit margin	40%
Current ratio	1.00
Debt to equity ratio	1.10

All Questions

EXHIBITS

Calculator