Answer all of the following questions/problems and submit them to your mentor in a Word document.
You should use a financial calculator and Excel to solve the problems.
Remember: You must export your table(s) from Excel to Word before submitting your work.
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Discuss the importance of financial statements and how they are used by businesses.
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What is the basic format of the income statement and what is the relevance of the basic categories?
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Cash flows for an organization come from operating activities and investment activities. Discuss the importance of each to the organization.
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The Happy Auto Shop has the following annual information:
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Gross Sales
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$700,000
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Net sales
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$696,000
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Gross profit
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$448,000
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What are the shop’s returns and allowances and cost of goods sold?
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Construct a statement of financial position (balance sheet) for the Humperdink family using the following information:
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cash
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$50
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Checking account
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$2,500
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student loan balance
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$6,000
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stocks and bonds
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$2,600
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savings account
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$5,850
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residence
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$110,000
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automobile
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$12,000
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savings account
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$5,800
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automobile loan balance
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$12,000
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401K retirement account
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$15,000
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furniture, clothing, jewelry
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$8,000
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credit card balance
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$4,000
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mortgage loan balance
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$99,000
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What is the purpose of financial statement analysis? How do the three types of financial statement analysis differ from each other and when is each used?
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Samantha Knight is applying for a small-business loan. She provides the bank with the following information:
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cash in checking accounts
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$5,000
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cash in savings
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$10,350
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home market value
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$145,500
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first mortgage on house
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$25,000
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home equity loan limit
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$70,000
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home equity loan
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$10,000
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automobile market value
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$19,000
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automobile loan outstanding
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$15,000
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credit card debt
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$1,500
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Calculate the debt-to-asset ratio.
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Calculate the debt-to-equity ratio.
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What percentage of Samantha’s assets is owned by others?
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Given the profit loss (income statement) and balance sheet for Sam’s Sandwich Delivery (Table 4-8, page 121 of your textbook), answer the following:
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Calculate the following ratios: current, quick, accounts receivable turnover, fixed asset turnover.
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Using the inventory figure on the balance sheet as average inventory, calculate the inventory turnover ratio.
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Calculate the debt-to-equity ratio, debt-to-total asset ratio, and operating profit margin ratio.
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Perform a vertical analysis of the income statement.
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Perform a vertical analysis of the balance sheet.
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Based on your analysis, would you consider investing in Sam’s Sandwich Delivery?
