Table 1 Balance Sheet for Brookstone Feed and Grain Company

31-Dec-15
(a)

Assets

(b)

Current Assets:

(c)

Cash/checking

(d)

Accounts Receivable

(e)

Inventory

(f)

Prepaid Expenses

(g)

Other

(h)

Total Current Assets

(i)

Fixed Assets:

(j)

Land

(k)

Building

600,000

(l)

Less: Accumulated Depreciation

150,000

(m)

Equipment

(n)

Less: Accumulated Depreciation

(o)

Total Fixed Assets

(p)

Other Assets

(q)

Total Assets

(r)

Liabilities

(s)

Current Liabilities:

(aa)

Accounts Payable

(bb)

Notes Payable

(cc)

Accrued Expenses

(dd)

Advances

(ee)

Total Current Liabilities

(ff)

Long-Term Liabilities:

(gg)

Mortgages

(hh)

Other

(ii)
(jj)

Total Long-Term Liabilities

Total Liabilities

1,300,000
520,000

(kk)

Owners Equity

(ll)

Owner-invested Capital:

(mm)

Common Stock

(nn)

Retained Earnings

(oo)

Total Owners Equity

(pp)

Total Liabilities and Owners

Equity

e Feed and Grain Company

$175,000
1,600,000
2,500,000
7,000
5,000
$4,287,000
1,150,000

450,000

780,000
2,380,000
10,000
$6,677,000

800,000
1,000,000
35,000
27,000
1,862,000
1000000
150000
1150000
3,012,000

1,885,000
1,780,000
3,665,000
6,677,000

Table 2 Income Statement for Brookstone Feed and Grain Company, Y

(a) Sales:
Grain and Soybeans
$8,146,000
Seed
670,500
Fertilizer and Chemicals
2,213,000
Feed
1,810,000
Miscellaneous Supplies
402,300
Service Income
268,200
Gross Sales
13,510,000
Less Returns, Allowances, and Discounts
100,000
13,410,000
Net Sales
(b)Cost of Goods Sold:
Grain and Soybeans
7,556,900
Seed
511,650
Fertilizer and Chemicals
1,791,420
Feed
1,534,380
Miscellaneous Supplies
330,650
Service Expense
0
Total Cost of Goods Sold
11,725,000
(c) Gross Profit (Margin)
1,685,000
(d) Operating Expenses:
(e) Salaries and Benefits
210,000
(f) Full-time Wages
166,000
(g) Part-time Wages
10,400
(h) Commissions
42,740
(i) Depreciation
290,000
(j) Maintenance and Repairs
58,000
(k) Utilities
56,990
(l) Insurance
71,200
(m) Office Supplies/Expense
26,820
(n) Advertising/Promotion
6,400
(o) Gas and Oil
48,600
(p) Delivery and Freight
156,710
(q) Rent
6,300
(r) Taxes, Licenses, Fees
48,160
(s) Miscellaneous
3,300
(t) Payroll Tax
10,900
(u) Bad Debt
3,290
(v) Total Operating Expenses
1,215,810
(w) Net Operating Income
469,190

(x) Other Revenue

(y) Interest Expense
(z) Net Income Before Taxes
(aa) Taxes
(bb) Net Income After Taxes

18,200
230,840
256,550
59,900
196,650

d Grain Company, Year Ending December 31, 2015

100.00%

87.43%
12.57%
1.57%
1.24%
0.08%
0.32%
2.16%
0.43%
0.42%
0.53%
0.20%
0.05%
0.36%
1.17%
0.05%
0.36%
0.02%
0.08%
0.02%
9.07%
3.50%

0.14%
1.72%
1.91%
0.45%
1.47%

Table.3 Statement of Owners Equity for Brookstone Feed and Grain

Year Ending December 31, 2015
Owners Equity,
December 31, 2014
Retained
Earnings, December
31, 2014
Net Profit After
Taxes, 2015
Dividends
Withdrawals

$1,680,000

$196,650
0
96,650

Increase
(Decrease) in
Retained Earnings

$100,000

Retained
Earnings, December
31, 2015

$1,780,000

Common Stock,
December 31, 2014

$1,885,000

+ Increases

Decreases

Increase
(Decrease) in
Common Stock
Common Stock,
December 31, 2015

Owners Equity,
December 31, 2015

$0

$1,885,000

e Feed and Grain

$3,565,000

$3,665,000

Table. 4 Statement of Cash Flows for Brookstone Feed and Grain Company, Year
Ending December 31, 2015

Cash Flow from Operating

Activities

Net Profit after Taxes

+ Depreciation
Increase in Accounts
Receivable
Decrease in Accounts
Payable
Decrease in Accrued
Expenses
Net Cash from Operating
Activities

$196,650
290,000
20,000
15,000
15,000
$436,650

Cash Flow from Investing

Activities

Cash Proceeds from Sale of

Equipment

$10,000

Cash Purchase of Equipment

336,650

Net Cash from Investing

Activities

($326,650)

Cash Flow from Financing

Activities

+ Increase in Notes Payable

Decrease in Mortgages
Net Cash from Financing
Activities

$45,000
75,000
($30,000)

Net Change in Cash

$80,000

Beginning Cash Balance

$95,000

Ending Cash Balance

$175,000

Profitability ratios
1) Earnings on sales (EOS)
The higher the better
2) Return on sales (ROS)
The higher the better
3) Return on equity (ROE)

The higher the better

4) Return on Assets (ROA)
The higher the better
5) Gross margin ratio (GM)
The higher the better

Net operating income/net sales

0.0350 Focuses on operating effeciency and pricing policies
Each one dollar sales generates about 0.03 dollar of oper

Net income after taxes/net sales

0.0147 Focuses on operating effeciency, pricing, on the after tax
Each dollar sales generates about 0.01 dollar of after tax

Net income after taxs/owner's equity

0.05 Determines the return on owner investment
Owner uses it to pick investment opportunities
Each dollar the owner invested bring in 0.05 dollar as net

(Net income after taxes + interest expense)/total assets

$0.06 Focuses on net income generated from total assets.
Each dollar of the total assets generats 0.06 dollar of net

Gross margin/net sales

0.1257 Shows how much the business has left from each dollar o
Each dollar of net sales generates about 0.12 cents to co

Liquidity ratios
1) Net working capital (NWC)
Total current assets - total current liabilities
$2,425,000 Shows how much is available to meet short term obligatio
The higher the better
It shows that the business has $2,425,000 to meet short
2) Current ratio (CR)
The higher the better

3) Quick ratio (QR)

The higher the better
4) leverage ratio
The lower the better

Total current asests/total current liabilities

2.30 Indicates a firm's ability to meet its current obligations
The firm has $2.3 of current asset to cover one dollar of t
Goal is 2

(Total current assets-inventory)/Total current liabilities

0.9597 Indicates a firm's ability to meet its current obligations, ta
Goal 0.8-1

Total asset/owner's equity

1.82 Indicate the company's debt used to finance the firm
Each one dollar in the firm is financed by $1.82 of borrow

Solvency
1) Debt-to-equlity ratio (D/E)
Total liabilitys/owner's equity
0.8218 Indicates relationship of owner's equity to the total liabilit
The smaller the better
Goal is under 1
Each one dollar of owner's equity is used to finance abou
2) Solvency ratio

The higher the better

3) Debt-to-assets ratio (D/A)

The smaller the better

Efficiency ratio
1) asset turnover ratio
The higher the better
2) Inventory turnover ratio
The higher the better

1.00 Owner's equity/(total assets - total liabilities)

0.89 Owner's equlty/(net working capital+net fixed assets)
Goal is greater than 0.5
Each one dollar of owner's equity is used to finance $0.76

total liability/total assets

0.45 Indicates the relationship of total liability to the total asse
Goal is less than 0.5
Each one dollar of the total assets is used to finance $0.4

Net sales/total assets

2.01 Determines the intensity of use of assets
The company generates $2.01 of net sales per dollar of a

Cost of goods sold/ending inventory

4.69 Indicates how efficient investment in inventory is manage
Inventory turns over 4.69 times a year

3) Days sales in accounts receivable ratio=(accounts receivable/net sales) 360 days

42.95 Average collection period of accounts receivable
The smaller the better
It takes about 42.9 days to collect the account receivable
4) Wage efficiency ratio
The smaller the better

Labor cost/net sales

0.0132 In each dollar of net sales, about $0.01 is spent on labor.

and pricing policies

about 0.03 dollar of operating income

0.034988069

pricing, on the after tax base

ut 0.01 dollar of after tax return.

investment
t opportunities
bring in 0.05 dollar as net income after taxes

st expense)/total assets
d from total assets.
enerats 0.06 dollar of net income after taxes.

as left from each dollar of net sales to pay operating expenses and other business costs plus make a p
es about 0.12 cents to cover operating expenses plus make a profit.

nt liabilities
meet short term obligations
2,425,000 to meet short term obligations.

liabilities
its current obligations
et to cover one dollar of the total current liability

Total current liabilities

its current obligations, taking into account of inventory. Because, inventory may not be easility liquida

d to finance the firm

anced by $1.82 of borrowed dollar.

equity to the total liability of the firm

y is used to finance about $0.82 of owner's debt.

al liabilities)
ital+net fixed assets)

1,710,000
Net fixed assets = total fixed assets- depreciation

y is used to finance $0.76 of the long term debt.

l liability to the total assets of the firm

ts is used to finance $0.45 of the company's long term debt.

f net sales per dollar of assets

nt in inventory is managed

sales) 360 days

ounts receivable
ct the account receivables

$0.01 is spent on labor.

her business costs plus make a profit.

ntory may not be easility liquidated.

sets- depreciation