BALANCE SHEET

Current Assets
Inventory of Raw Materials 18000
Inventory of Finished Goods 28000
Trade Debtors 34000
80000
Non Current Assets
Freehold land and buildings 245000
Plant and Machinery 127000
Delivery Vehicles 54000
426000
TOTAL ASSETS 506000
Current Liabilities
Bank Overdraft 22000
Trade Creditors 23000
45000
Non Current Liabilities
Loan from NAB 100000
TOTAL LIABILITIES 145000
NET ASSETS 361000
Equity
Capital 361000
361000
BALANCE SHEET
Current Assets
Bank 73000
Trade Debtors 38000
Inventory 17000
128000
Non Current Assets
Furniture & Fittings 63000
Motor vehicle 10000
Freehold 145000
218000
TOTAL ASSETS 346000
Current Liabilities
Trade Creditors 24000
TOTAL LIABILITIES 24000
NET ASSETS 322000
Equity
Capital 313000
Profit 9000
322000
Assets =
Bank Debtors Inventory Furn & Fit Freehold
(43000) 33000 28000 63000 145000
(43000) 33000 28000 63000 145000 0 0 =
226000
Liabilities + Equity +
Creditors Capital
23000 203000
23000 0 0 0 0 203000 0
226000
Revenues -
Expenses
Income Statement 30/6/2006
Revenue
Sales 280,000
Less:
Cost of Sales (160,000)
GROSS PROFIT 120,000
Less Expenses:
Salary & Wages 37,000
Loan interest 4,000
Insurance 2,000
Tel & Post 1,500
Rents & rates 12,400
Heat & Light 3,700
Equip Repairs 1,600
Dep - MV 4,500
MV running costs 1,700
Dep - Equip 3,200
Acc & Audit 3,400
Bad & DD Debts 800
(75,000)
PROFIT BEFORE other income 45,000
Other Income:
Royalties 1,700
NET PROFIT 46,700
Cost $50,000
Useful life 5 years
Residual $20,000
Dep required $30,000
Straight Line 6000 per year
wdv 6/30/2005 $44,000
6/30/2006 $38,000
Cost 50000 0.632456 0.167447
6/30/2005 8372.326
WDV 41627.67
6/30/2006 6970.409 3.777706
WDV 34657.27 See Slide 21 Lecture 2
6/30/2007 5803.238
WDV 28854.03
6/30/2008 4831.506
WDV 24022.52
6/30/2009 4022.487
WDV 20000.03
ROSE LTD
Income Statement 31/3/2006
Sales 12114.00
Cost of Sales -6284.00
GROSS PROFIT 5830.00
Labour Costs 2659.00
Dep 699.00
Bad debts 20.60
Other 1003.00
4381.60
Net profit before interest 1448.40
Interest Expense 66.00
Net Profit before tax 1382.40
Tax Expense 414.72
Net profit after tax 967.68
Dividend declared 300.00
Retained Profit for the year 667.68
Retained Profit brought fwd 756.00
Retained Profit carried fd 1423.68
Balance Sheet as at 31/3/2006
CURRENT ASSETS
Cash at bank 26.00
Trade Debtors 1030.00
Prov for DD. -20.60
1009.40
Inventory 1581.00
Total Current Assets 2616.40
NON CURRENT ASSETS 2670.00
TOTAL ASSETS 5286.40
CURRENT LIABILITIES
Bank Overdraft 296.00
Tax payable 414.72
Dividend payable 300.00
Trade Creditors 1134.00
Other creditors 418.00
2562.72
NON CURRENT LIABILITIES
Secured Loan 300.00
TOTAL LIABILITIES 2862.72
NET ASSETS 2423.68
SHAREHOLDER EQUITY
Share capital 1000.00
Retained Profits 1423.68
TOTAL LIABILITIES AND SHAREHOLDER EQUITY 2423.68
Assets = Liabilities +
Bank Debtors Inv NCA Acc Dep Overdraft Tax
26 996 1583 2728 296 434
26 996 1583 2728 0 = 296 434
5333
Equity +
Div Pay Creditors Other Cred Sec Loan Capital Ret Profit
300 1118 417 300 1000 756 12080
(6282)
(2658)
(625)
(1003)
(66)
(434)
(300)
300 1118 417 0 300 1000 756 712
5333
Revenues -
Expenses
sales
Cogs
wages
Dep
Other Exp
Interest
Tax
Dividend
Revenues -
Expenses
Credit sales not paid by debtors therefore profit is more than cash received.
Creditors paid balnces owing plus all purchases, so the cash flow out of the bank is more.
Expenses have been prepaid
Accrued Income recognised but no cash received in the bank.
Is the daily operations of the business generating net inflows?
Are we collecting money from our debtors in a timely manner?
Are we paying interest on loans?
Are we investing surplus funds?
Did we make a profit (ie did we pay income tax)
Have purchased NCA or dispossd of them? Are we upgrading them?
How did we finance the company? Extra loans? Share Issues?
Did Shareholders withdraw funds from the business?
Did we pay a dividend? How was this financed?
How liquid is the business?
Financially stable?
Effects of Balance Sheet account year end balance differences
1 Increase in Accounts Receivable (debtors) = less cash in
Decrease in Accounts Receivable (debtors) = more cash in
2 Increase in Inventory = more purchases (COGS)
Decrease in Inventory = less purchases (COGS)
3 Increase in Accounts Payable = less cash paid
Decrease in Accounts payable = more cash paid
4 Increase in Prepaid Expenses = more cash paid
Decrease in Prepaid Expenses = less cash paid
Increase in Accrued Expenses = less cash paid
Decrease in Accrued Expenses = more cash paid
5 Increase in Prepaid Income = more cash in
Decrease in Prepaid Income = less cash in
Increase in Accrued Income = less cash in
Decrease in Accrued Income = more cash in
6 Increase in Tax payable = less cash paid
Decease in Tax payable = more cash paid
7 Increase in Non current Assets = more cash paid
8 Increase in Non Current Liabilities = more cash in
Decrease in Non Current Liabilities - less cash in
2006 2007
ROA 17.46% 24.35%
NPM 11.67% 16.00%
GPM 40.00% 44.00%
AT 384.77 363.54 days
AV ITP 95.31 63.88 days
DD 44.10 29.20 days
INT COV 2.8 5.333333 times
Personal Service is A Because GP is erroded by other expenses (Wages)
Buis A
Low turnover high quality ROA ROE
Service, Customer satisfaction etc Ddays Cdays
Assets =
0 0 0 0 0 0 0 =
0
Liabilities + Equity +
0 0 0 0 0 0 0
0
Revenues -
Expenses