| This is a comprehensive problem all contained on this spreadsheet tab. You are to prepare a cash flow statement, a vertical |
| analysis, a horizontal analysis, and some ratio calculations. Scroll down the spreadsheet to complete each part. |
| Philadelphia Widget Corporation is in the process of preparing financial statements for the year ended 12/31/2015. |
| They have completed the balance sheet and income statement as shown. |
| Philadelphia Widget Corporation |
| Income Statement |
| For the year ended 12/31/2015 |
| Revenue | | 1,235,000 |
| Cost of Goods Sold | | 806,656 |
| Gross Profit | | 428,344 |
| Administrative Expenses: |
| Salaries | 212,450 |
| Rent | 82,500 |
| Depreciation | 24,800 |
| Total Administrative Expense | | 319,750 |
| Operating Profit | | 108,594 |
| Gain on Sale of Equipment | | 4,500 |
| Interest Expense | | (42,115) |
| Net Income | | 70,979 |
| Philadelphia Widget Corporation |
| Balance Sheet |
| As of 12/31/2015, 12/31/2014, and 12/31/2013 |
| | 2015 | | 2014 | | 2013 |
| Cash | | 119,411 | | 89,564 | | 105,644 |
| Accounts Receivable | | 85,455 | | 83,118 | | 78,400 |
| Inventory | | 41,300 | | 48,560 | | 62,600 |
| Prepaid Expenses | | 14,500 | | 18,100 | | 24,000 |
| Total Current Assets | | 260,666 | | 239,342 | | 270,644 |
| Land | | 50,000 | | 50,000 | | 50,000 |
| Buildings and Equipment | 182,450 | | 172,450 | | 166,800 |
| Accumulated Depreciation | 78,900 | 103,550 | 62,600 | 109,850 | 54,580 | 112,220 |
| Total Assets | | 414,216 | | 399,192 | | 432,864 |
| Accounts Payable | | 62,525 | | 51,480 | | 45,200 |
| Wages payable | | 4,500 | | 4,500 | | 1,500 |
| Unearned Revenue | | 3,000 | | - 0 | | - 0 |
| Current Portion of Long-Term Debt | | 50,000 | | 50,000 | | 50,000 |
| Total Current Liabilities | | 120,025 | | 105,980 | | 96,700 |
| Long-Term Debt | | 175,000 | | 225,000 | | 275,000 |
| Common Stock, 3500 shares outstanding | 35,000 | | 35,000 | | 35,000 |
| Retained Earnings | 84,191 | | 33,212 | | 26,164 |
| Total Stockholders' Equity | | 119,191 | | 68,212 | | 61,164 |
| Total Liabilities and Equity | | 414,216 | | 399,192 | | 432,864 |
| A. Prepare a Statement of Cash Flow using the indirect method for 2015 using the above statements and the following additional information: |
| 1. Equipment costing $30,000 was purchased in 2015. |
| 2. Equipment having an original cost of $20,000 and accumulated depreciation of $8,500 was sold for $16,000 during 2015. |
| 3. A dividend of $20,000 was declared and paid in 2015. |
| Philadelphia Widget Corporation |
| Statement of Cash Flow |
| For the year ended 12/31/2015 |
| B. Prepare a vertical analysis (1 year) of the income statement above and a horizontal analysis (2 years) of the balance sheet. |
| Philadelphia Widget Corporation |
| Vertical Analysis of Income Statement |
| Philadelphia Widget Corporation |
| Horizontal Analysis of Balance Sheet |
| * n/c = not calculable |
| C. Calculate the following ratios based on 12/31/2015 numbers: |
| 1. Earnings per share |
| 2. Return on common stockholder's equity |
| 3. Return on assets |
| 4. Current ratio |
| 5. Acid-test ratio |
| 6. Accounts receivable turnover |
Ernesto Sabato
week_3_homework_problems.xlsx
