What is the Balance Sheet? What does it tell us about an organization?

MGT252. Project Finance and Budgeting
Assignment 1

1. What is the Balance Sheet? What does it tell us about an organization?

2. What is the Income Statement? What does it tell us about an organization?

3. What is the Cash Flow Statement? What does it tell us about an organization?
4. Using the data from the following Financial Statements, compute:
a. Current ratio:
b. Quick ratio:
c. Profit margin on sales:
d. Return on total assets:
e. Return on equity:

Balance Sheet Ajax Corp. Acme, Inc.
Cash $2,255,000 $67,000
Accounts Receivable $565,000 $1,110,000
Inventory $1,332,000 $2,441,000

Total Current Assets $4,152,000 $3,618,000

Net Property, Plant and Equipment $369,000 $1,327,000
Other Assets $211,000 $597,000

Total Assets $4,732,000 $5,542,000

Accounts Payable $27,000 $168,000
Notes Payable Sort Term $426,000 $819,000
Other Short Term Liabilities $2,000 $56,000

Total Current Liabilities $455,000 $1,043,000

Notes Payable Long Term $1,222,000 $943,000

Total Liabilities $1,677,000 $1,986,000

Stockholders’ Equity $3,055,000 $3,556,000

Total Liabilities and Stockholders’ Equity $4,732,000 $5,542,000
Income Statement Ajax Corp. Acme, Inc.
Sales $32,752,000 $4,835,000
Cost of Sales $28,273,000 $2,966,000

Gross Profit $4,479,000 $1,869,000

Selling, General and Administrative Expenses $2,541,000 $912,000

Income before Interest and Taxes $1,937,000 $957,000

Interest Expense $129,000 $88,000

Income before Taxes $1,808,000 $869,000

Taxes $723,000 $280,000

Net Income $1,085,000 $589,000

5. What does each of these financial ratios tell us about a company?
a. Current ratio

b. Quick ratio:

c. Profit margin on sales:

d. Return on total assets:

e. Return on equity:

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