Finance Assignment
yugigogo09
financialstatement.docxRunning Head: ISSYCAKE INVESTMENT ANALYSIS 1
ISSYCAKE INVESTMENT ANALYSIS 2
Abdullah Haggi
The statement of income and expenditure statement is used to analyze the net earnings and the performance of the firm or a sole proprietor which is useful in making decision for one to commit more or close down the business in the event of consecutive loss making (Lubbe et al..,2014). Apparently, the statement of financial position also is useful in analysis which clearly helps to determine the working capital of the firm as well as well the ability to settle its debts.
The generally accepted accounting principles have been used in coming up with the above statements to ensure accurate, reliable and relevant information that is crucial to answering the questions raised by Issy wishing to expand his business from home setting to retail location (Dudin et al.. 2015).
Amortization and loan analysis
The income and expenditure, balance sheet and cash flow statements for Issy cake entrepreneur.
From the above statements, Issy needs to make an effort and acquire a loan of $150,000 to which will help her finance the deficit experienced after using the owners’ equity from her saving of $50000. Given a loan of $150,000 Issy will have amortization of $2337.33 which is composed of an interest of $551.62 per month and principal of$ 1785.7142 per month given a total of 84 periods which is equivalent to 7 years.
Additionally, from the above statements it is definitely clear that the returned earnings for 12 months if ISSy takes loan will be $(17690.0104) which translate to a loss. It is therefore important from the above analysis for ISSy to consider raising more cash in form of saving as well as doing adjustments in her expenses, because working with current information in her documents she will end up making losses.
Reference
Dudin, M., Prokofev, M., Fedorova, I., Frygin, A., & Kucuri, G. (2015). International Practice of Generation of the National Budget Income on the Basis of the Generally Accepted Financial Reporting Standards (IFRS).
Lubbe, I., Modack, G., & Watson, A. (2014). Financial accounting GAAP principles. OUP Catalogue.
Description of Issycake loan data$US
mortgage130000
Interest per annum8%
term ( years)7
compounding12
payment($2,337.33)
starting month
month123456789101112
Expenses
Interest551.62551.62551.62551.62551.62551.62551.62551.62551.62551.62551.62551.62
Amortization
principal 1785.71421785.7141785.71421785.71421785.71421785.71421785.71421785.71421785.71421785.71421785.71421785.7142
TOTAL2337.33422337.3342337.33422337.33422337.33422337.33422337.33422337.33422337.33422337.33422337.33422337.3342
INCOME STATEMENT MONTH 1MONTH 2MONTH 3MONTH 4MONTH 5MONTH 6MONTH 7MONTH 8MONTH 9MONTH 10MONTH 11MONTH 12YEAR 1
Sales by piece$2$2$2$2$2$2$2$2$2$2$2$2$2
Sales by piece64507418741881598159815981598159815985688996944597249
Cost of goods sold129001483614836163181631816318163181631816318171361799218890194498
Expenses
rent 21002100210021002100210021002100210021002100210025200
operating expenses8008008008008008008008008008008008009600
advertising30003000300010001000100010001000100010001000100018000
start up expenses10000000000000000
cost of ingredients15481780178019581958195819581958195820562159226723340
wages820082008200820094009400940094009400940094009400108000
interest on loan551.62551.62551.62551.62551.62551.62551.62551.62551.62551.62551.62551.626619.44
principal repayment 1785.71421785.71421785.71421785.71421785.71421785.71421785.71421785.71421785.71421785.71421785.71421785.714221428.5704
total expenses27985.334218217.334218217.334216395.334217595.334217595.334217595.334217595.334217595.334217693.334217796.334217904.3342212188.0104
net income -15085.3342-3381.331-3381.331-77.33-1277.33-1277.33-1277.33-1277.33-1277.33-557.334195.666985.666-17690.0104
Balance sheet
Assets:
current
cash62309.9896
fixed assets
kitchen120,000
total assets182,310
liabilities and owners equity
liabilities
amortization principal150,000
total liabilities150,000
owners equity
capital stock50,000
net earnings-17,690.01
total liabilities and owers equity182,310
cashflow and outflows
beginning cash50000
net income-17690.0104
change in assets
kitchen constructed120000
change in the liabilities
cash from financing equity50000
cash from financing debt150000
closing cash62309.9896
