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Company's economics - Essay Example

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By taking accounting and financing ratios into account, we can observe clearly that company B is performing much better than company A. The state of liquidity is excellent in company B where the current ratio is 6.132 in the year 2010, and it increased in 2011. …
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Download file to see previous pages ntory 60000 Purchases 200000 Advertising Expenses 20000 Rent 7200 Telephone 1200 Utilities 4800 Payroll 112000 Loan-1 (336x12) 4032 Bal C/d 1392 Loan-2 (8000+4160) 12160 Common Stock A/C Interest A/C Bal c/d 60000 Cash 60000 Cash 4160 Profit/Loss A/c 4160 Loan A/C Pickup Truck A/c Cash 4032 Cash 32000 Cash 2000 Cash 8000 Pickup Truck 10000 Loan 10000 Bal c/d 12000 Bal C/d 29968 Display Equipment A/C Debtors A/C Cash 6000 Bal C/d 6000 Sales 60000 Balc/d 60000 Rototiller A/c Rent A/C Cash 400 Bal c/d 400 Cash 7200 Profit/Loss A/c 7200 Cash Register A/C Telephone Expense A/C Cash 3600 Cash 1200 Profit/Loss A/C 1200 Inventory A/C Utilities A/C Cash 60000 Cost of Sales 240000 Cash 4800 Profit/Loss A/C 4800 Cash 200000 Bal c/d 20000 Payroll A/C Sales A/C Cash 112400 Profit/Loss A/C 112400 Cash 340000 Profit/Loss A/c 400000 Debtors 60000 Advertising Expense Cash 20000 Profit/Loss A/C 20000 THE GARDEN PLACE INCOME STATEMENT FOR THE YEAR ENDED MARCH 31 2007 $ $ Sales 400,000 Less: Cost of Goods Sold Opening stock 60000 Purchases +200000 Stock available for sale 260000 Less: closing stock (20000) Cost of goods sold (240000) Gross profit 160000 Less: Expenses Interest expense 4160 Advertising expense 20000 Rent 7200 Telephone 1200 Utilities 4800 Payroll 112000 (149360) Net Income 10640 Balance Sheet VERTICAL ANALYSIS COMPANY A BALANCE SHEET 2011 2010 Assets $ % $ % Current Assets Cash 4274 1.58% 1270 1% Trade Accounts Receivables 56504 20.95% 41174 22% Inventories 184113 68.26% 132196 70% Deferred tax payment 3384 1.25% 2611 1% Other current assets 11053 4.10% 8795 5% Total current assets 259328 96.14% 186046 98% Advance to supplier, net of imputed interest 4479 1.66% 0 0% Preferential supply agreement 521 0.19% 0 0% Long term financing cost, net of amortization 1360 0.50% 0 0% Property and equipment, net 4060 1.51% 4078 2% Total assets 269728 100.00% 190124 100% Liabilities and shareholders’ equity Current liabilities Notes payable 154424 57.25% 100447 53% Current maturities 160 0.06% 15131 8% Trade accounts payable 50054 18.56% 31482 17% Income tax payable 4060 1.51% 6143 3% Accrued expense and derivative liabilities 4089 1.52% 10537 6% Dividends payable 231 0.09% 0 0% Total current liabilities 213018 78.98% 148760 78% Mortgage payable 1461 1621 1% Subordinated convertible debt net of unamortized discount 9501 0.54% 0 0% Derivative liability for embedded conversion option 1934 3.52% 0 0% Deferred tax payable 212 0.72% 0 0% Stakeholders Equity Common stock$0.1 par value, 20000000 shares authorized and 11749651 issued Dec31 2011 and 2010 117 0.04% 117 0% Additional paid in capital 11937 4.43% 11937 6% Retained Earnings 35271 13.08% 31235 Accumulated other comprehensive loss (214) -0.08% (96) 0% Treasury stock 2511245 and 2490745 shares at Dec31 2011 and 2010 (3509) -1.30% (3450) -2% Total shareholders’ equity 43602 16.17% 39743 21% Total liabilities and shareholders’ equity 269728 100.00% 190124 100% COMPANY A INCOME STATEMENT VERTICAL ANALYSIS $ % $ % Net Sales 514633 100.00% 465013 100.00% Cost of goods sold 490102 95.23% 434785 93.50% Gross Profit 24531 4.77% 30228 6.50% Selling, general and administrative expense 13336 2.59% 12031 2.59% Operating income before impairment recovery 11195 2.18% 18197 3.91% Impairment recovery 0 0.00% 346 0.07% Operating income 11195 2.18% 18543 3.99% Other income/expense Change in ...Download file to see next pagesRead More
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