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Income statement

		Donna's Boutique
	Income statement
	For the year ended 31st December, 2014
Sales revenue
Total sales			$78,000
Less. Sales returns/allowances			$0
Net sales revenue				$78,000
Less cost of goods sold
Beginning stock			14000
Add. Purchases			32000
Less. Ending stock			($18,000)
Cost of goods sold				($28,000)
Gross profit				$50,000
Operating expenses
employees salaries			21400
Unpaid invoices			16000
Payment for operating expenses			4000
Total operating expenses				($41,400)
Operating Income				$8,600
Other income and expenses
Uncollected invoices			24000
Withdraw for personal use			($22,000)
Net other income and expenses				2000
NET INCOME				$10,600

statement of cash flows

			Donna's Boutique
		statement of cash flows
		For period ended 31st December 2014
cash flows from operating activities:
operating income				$8,600
net cash from investing activities				$32,000
Net cash from financing activities				0
Net change in cash				$40,600
Beginning cash balance				$60,000
Ending cash balance				$100,600
out of the $100600 cash balance, $60000 belonged to Donna, so the ending balance for the business was
	$100600- $60000= $40600

Balance sheet

		Donna's Boutique
		Balance sheet
	For the period ended 31st December, 2014
ASSETS
Current Assets:
Cash			60000
accounts receivables			24000
prepaid rent			4800
inventory			28000
Total current assets			116800
non-current assets
Equipment			32000
total assets			$148,800
LIABILITIES AND OWNERS EQUITY
Accounts payable			16000
salaries			21400
Operating expenses			4000
unearned revenues			24000
withdraws			22000
Total liabilities			87400
Owners equity			60000
Total liabilities & owners equity			$147,400

financial ratios

Return on owners equity
it is a profitability ratio that measures the ability of a firm to generate profits from its shareholders investment in the company.
ROE= Net income/Shareholder equity
	10600/6000= 0.18
operating cash flow margin
measures what percentage of total revenues is made by operating income. The ratio shows what proportion of revenues is available to cover non-operating costs
operating cash flow margin= operating income/Net sales
	8600/78000= 0.11
	0.11*100= 11%
cash return on total assets
it measures the efficieny of the business in using its assets to generate net income.
	Return on assets= Annual net income/ Average total assets
		10600/ (148800/2)= 0.14
		0.14*100= 14%
	Higher value of return on assets shows that the business is more profitable
Current ratio
it measures a firm's ability to pay off its short-term liabilities with its current assets.
	current ratuo= current assets/ current liabilities
		116800/87400= 1.34
A higher current ratio is always more favorable than a lower current ratio because it shows the company can more easily make current debt payments.
Debt ratio
measures a firm's total liabilities as a percentage of its total assets
	total liabilities/ total assets
	87400/148800= 0.59
Donna's Boutique has a reasonable debt ratio.
cash return on owner equity
It is the ratio of net income of a business during a year to its stockholders' equity during that year.
It shows net income as percentage of shareholder equity
	cash return on owner equity= annual income/ average stock holder equity
			10600/30000= 0.35
			0.35*100= 35%