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Ian Manufacturing - Financial Analysis

Table of Contents

Financial Statements 2
Part A 3
Part B 7
Part C 8

Financial Statements

Ian Manufacturing company was organized five years ago and manufactures toys. The most recent three year's balance sheets and income statements are reproduced below:

Ian Manufacturing Company
Balance sheets
June 30, Year 5, year 4 and year 3
Year 5 Year 4 Year 3
Assets
Cash $12,000 $15,000 $16,000
Accounts receivable net 183,000 80,000 60,000
Inventory 142,000 97,000 52,000
Other current assets 5,000 6,000 4,000
Plant and Equipment, net 160,000 110,000 70,000
Total asset $502,000 $308,000 $202,000

Liabilities and Equity $147,800 $50,400 $22,000
Accounts payable 30,000 14,400 28,000
Federal income tax payable 120,000 73,000 22,400
Common stock,$5 Par value 110,000 110,000 80,000
Retained earning 94,200 60,200 49,600
Total Liabilities and Equity $502,000 $308,000 $202,000

IAN Manufacturing Company
Condensed Income Statement
For years ended June 30, Year 5, Year 4, Year 4

Year 5 Year 4 Year 3
Net sales $1,684,000 $1,250,000 1,050,000
Cost of Goods sold (927,000) (810,000) (512,000)
Gross profit 757,000 440,000 538,000
Marketing and administrative costs (670,000) (396,700) (467,760)
Operating Income 87,000 433,000 70,240
Interest Cost (12,000) (7,300) (2,240)
Income before Income Tax 75,000 36,000 68,000
Income Tax (30,000) (14,400) (28,000)
Net Income 45,000 21,600 40,000

IAN Manufacturing Company
Statement of retained Earnings
For the year ended June 30, Year 5 and Year 4

Year 5 Year 4
Balance, Beginning 60,200 49,600
Add: Net Income 45,000 21,600
Subtotal 105,200 71,200
Deduct : Dividends Paid 11,000 11,000
Balance, Ending 94,200 60,200

Part A

Compute the following measures for both years 4 and 5
1. Working capital
2. Current ratio
3. Acid-test ratio
4. Accounts receivable turn over
5. Collection period of receivables
6. Inventory turn over
7. Days to sell inventory...