FINANCIAL REPORT

________________________________________________

In partial fulfillment of the requirements in

GE 14 (Technical Writing)

Submitted by:

AIRON KEITH M. ALONG

Submitted to:

PROF. JONREY Y. TORREVILLAS

January 17, 2020

 PB & Jonrey
Income Statement
For the Year Ended December 31, 2020

Revenue

Sales $7,000

Total Revenue $7,000

Less: Expenses

Cake Mix Expense $3,000

Telephone Expense $300

Repairs Expense $50

Interest Expense $1,000

Depreciation Expense $400

Total Expense $4,750

Net Profit $2,250

Less: Taxation (30%) $675

Net Profit After Tax $1,575

Figure 1. PB & Jonrey’s Income Statement

Income Statement

The income statement/statement of financial performance is a display of the

company’s profit and loss over a period of time. The profit and loss is computed by
subtracting all expenses from the total revenue of the company. This also helps in
determining whether or not the company is still profitable, which would later on be a
big part in the company’s decision-making.

The figure shows that PB & Jonrey’s total revenue for the period is $7000.
The total expenses incurred in order to attain the total revenue is equal to $4750.
The net income before tax can be solved by subtracting the total expenses from the
total revenue, which would then be equal to $2250. The Income tax is 30% of the
total net income before tax, which is $675. The net income of PB & Jonrey for this
period is $1575.
 PB & Jonrey
Balance Sheet
As of December 31, 2020

Assets

Bank $21,650

Computer $1,500

Oven $2,000

I Phone $500

Car less accumulated depreciation $2,600

Total Assets $28,250

Liabilities

Loan $9,000

John’s Car Shop $3,000

Taxation Payable $675

Total Liabilities $12,675

Owner’s Equity

Owner’s Equity at start of the year $15,000

Less: Drawings $1,000

Plus: Net Profit After Tax $1,575

Owner’s Equity at Year End $15,575

Total Liabilities and Owner’s Equity $28,250

Figure 2. PB & Jonrey’s Balance Sheet

Balance Sheet

The balance sheet/statement of financial position is a display of the

company’s total assets and how these assets are financed through debt/loans or
equity. Its foundation is the equation: Assets = Liabilities + Equity. Its primary
purpose is to state the company’s financial status at a specific point in time. It also
states what the company owns, how much it owes, and how much is the total
investments made to the same company.

The figure shows that the total assets of PB & Jonrey is equal to $28250. The
total liabilities amount to $12675. The total equity amounts to $15575. Adding the
total liabilities and total equity would amount to $28250, which is equal to the total
assets.

Vertical Analysis

ACCOUNT TOTAL PERCENTAGE

Gross Profit $7,000 100%
Total Expenses $4,750 67.86%
Net Profit before Tax $2,250 32.14%
Income Tax (30%) $675 9.64%
Net Income $1,575 22.5%

Figure 3. PB & Jonrey’s Income Statement Vertical Analysis

BUSINESS RATIOS

Liquidity Ratio (Current)

Current ratio is a formula that measures the company’s capacity to pay its
liabilities, specifically those payable within one year, using its assets.

Current Ratio = Total Current Assets / Total Current Liabilities

= $28,250 / $12,675
= 2.23 / 223%
The higher the ratio, the better the company’s liquidity. The current ratio of PB
& Jonrey is 223%, which indicates that the asset of the company is twice that of its
liabilities.

Activity Ratios

Activity ratio or efficiency ratio is a formula that measures the company’s

efficiency and profitability.

Total Asset Turnover Ratio = Total Net Revenue or Sales / Total Assets
= $7,000 / $28,250
 = 0.25

PB & Jonrey’s total asset turnover ratio is 0.25. This indicates that for every 1
dollar of asset, the company gains 25 cents from sales.

Leverage Ratio

Leverage ratio is a formula that measures how much of the company’s capital
are acquired through debt or loans. This can also be used to tell whether or not the
company can pay off its debts when due.

Debt Ratio = Total Liabilities / Total Assets

= $12,675 / $28,250
= 44.87%

Debt to Equity Ratio = Total Liabilities / Total Equity

= $12,675 / $15,575
= 81.38%

Equity Ratio = Total Equity / Total Assets

= $15,575 / $28,250
= 55.13%

Profitability Ratios

Profitability ratio is a formula that measures the company’s ability to generate

profit or earnings relative to its revenue, operating costs, assets, and shareholder’s
equity.

Net Profit Margin = Net Income / Revenue

= $1,575 / $7,000
= 22.5%
The net profit margin of PB & Jonrey is 22.5%. This indicates that the total
profit that JT’s Bakery generates from its total revenue is equal to 22.5%.