Eastern Electronics Income Statement For the years Ending December 31, 20x3 – 20
ID: 2744769 • Letter: E
Question
Eastern Electronics
Income Statement
For the years Ending December 31, 20x3 – 20x8
Years 20x7 and 20x8 are Budget Projections
All amounts in Euro $100,000
Account
20x3
20x4
20x5
20x6
20x7
20x8
Sales – Europe
156.4
158.0
162.0
167.0
172.0
177.2
Sales – Russia
-
6.2
25.6
37.8
54.8
71.2
Net Sales
156.4
164.2
187.6
204.8
226.8
248.4
Operating Expenses
Production
81.4
86.8
100.4
112.6
130.8
142.6
Admin & Selling
31.4
32.0
37.4
40.4
42.0
48.0
Depreciation
9.2
10.8
14.8
15.4
15.4
17.0
Excise Duties
23.0
22.4
23.4
23.8
24.4
25.2
Total Operating Exp
145.0
152.0
176.0
192.2
212.6
232.8
Operating Margin
11.4
12.2
11.6
12.6
14.2
15.6
Other Expenses
Interest Expense
1.6
1.6
4.6
4.2
4.8
5.4
Earnings before Tax
9.8
10.6
7.0
8.4
9.4
10.2
Income Tax
3.4
3.6
2.8
3.2
3.2
3.6
Net Earnings
6.4
7.0
4.2
5.2
6.2
6.6
Dividends
4.8
5.2
3.0
4.2
4.8
4.8
Retention of Earnings
1.6
1.8
1.2
1.0
1.4
1.8
Eastern Electronics
Balance Sheet
As of December 31, 20x3 – 20x8
Years 20x7 and 20x8 are Budget Projections
All amounts in Euro $100,000
Account
20x3
20x4
20x5
20x6
20x7
20x8
Assets
Cash
13.6
20.0
22.4
24.6
27.0
29.8
Accounts Receivable
Europe
17.4
18.0
18.2
19.0
19.4
19.8
Russia
0
0.6
6.0
9.0
13.4
17.6
Allowance
-0.2
-0.2
-0.2
-0.2
-0.6
-0.8
Inventory
15.4
15.8
18.0
28.6
31.8
34.8
Total Current Assets
46.2
54.2
64.4
81.0
91.0
101.2
Property, Plant & Equi
147.4
147.4
153.0
153.0
170.8
188.0
Accum Depreciation
-59.0
-69.8
-84.6
-100.0
-115.4
-132.4
PP & E Net
88.4
77.6
68.4
53.0
55.4
55.6
Long-Term Invest
7.8
7.8
7.8
7.8
6.0
6.0
Total Long-Term
96.2
85.4
76.2
60.8
61.4
61.6
Total Assets
142.4
139.6
140.6
141.8
152.4
162.8
Liabilities & Equity
Accounts Payable
9.0
9.2
9.4
10.6
11.4
12.4
Short-Term Notes
7.6
14.4
15.2
15.8
25.6
34.6
Other Current Liab
18.6
18.0
20.6
22.6
25.0
27.2
Total Current Liab
35.2
41.6
45.2
49.0
62.0
74.2
Long-Term Notes
40.6
29.6
25.8
22.2
18.4
14.8
Total Liabilities
75.8
71.2
71.0
71.2
80.4
89.0
Stockholders Equity
60.0
60.0
60.0
60.0
60.0
60.0
Retained Earnings
6.6
8.4
9.6
10.6
12.0
13.8
Total Liab & Equity
142.4
139.6
140.6
141.8
152.4
162.8
There are 60,000 shares of closely held stock outstanding in the company.
Please help calculate
1. Receiveable Turnover
2. Average collection period
3. Inventroy Turnover
4. Any Profitablilty Ratios
Account
20x3
20x4
20x5
20x6
20x7
20x8
Sales – Europe
156.4
158.0
162.0
167.0
172.0
177.2
Sales – Russia
-
6.2
25.6
37.8
54.8
71.2
Net Sales
156.4
164.2
187.6
204.8
226.8
248.4
Operating Expenses
Production
81.4
86.8
100.4
112.6
130.8
142.6
Admin & Selling
31.4
32.0
37.4
40.4
42.0
48.0
Depreciation
9.2
10.8
14.8
15.4
15.4
17.0
Excise Duties
23.0
22.4
23.4
23.8
24.4
25.2
Total Operating Exp
145.0
152.0
176.0
192.2
212.6
232.8
Operating Margin
11.4
12.2
11.6
12.6
14.2
15.6
Other Expenses
Interest Expense
1.6
1.6
4.6
4.2
4.8
5.4
Earnings before Tax
9.8
10.6
7.0
8.4
9.4
10.2
Income Tax
3.4
3.6
2.8
3.2
3.2
3.6
Net Earnings
6.4
7.0
4.2
5.2
6.2
6.6
Dividends
4.8
5.2
3.0
4.2
4.8
4.8
Retention of Earnings
1.6
1.8
1.2
1.0
1.4
1.8
Explanation / Answer
20x3 20x4 20x5 20x6 20x7 20x8 1) Receivable turnover: Net Sales 156.4 164.2 187.6 204.8 226.8 248.4 Accounts Receivable Europe 17.4 18 18.2 19 19.4 19.8 Russia 0 0.6 6 9 13.4 17.6 Allowance -0.2 -0.2 -0.2 -0.2 -0.6 -0.8 Total Receivable 17.2 18.4 24 27.8 32.2 36.6 Receivable Turnover 9.22 8.85 7.91 7.56 7.22 (Net sales/average receivables) 2) Average collection period (days) = 365/receivable turnover 40 41 46 48 51 3) Inventory turnover 5.56 5.94 4.83 4.33 4.28 (cost of goods sold/average inventory) Production (taken as cost of goods sold) 81.4 86.8 100.4 112.6 130.8 142.6 Inventory 15.4 15.8 18 28.6 31.8 34.8 4) Profitability ratios: a) Operating profit ratio=Operating profit/net sales 7.29% 7.43% 6.18% 6.15% 6.26% 6.28% Operating Margin 11.4 12.2 11.6 12.6 14.2 15.6 Net Sales 156.4 164.2 187.6 204.8 226.8 248.4 b) Net profit ratio = net profit/net sales 4.09% 4.26% 2.24% 2.54% 2.73% 2.66% Net Earnings 6.4 7.0 4.2 5.2 6.2 6.6 c) Return on total assets: Net Income/average total assets 4.96% 3.00% 3.68% 4.21% 4.19% Net Earnings 6.4 7.0 4.2 5.2 6.2 6.6 Total Assets 142.4 139.6 140.6 141.8 152.4 162.8 d) Return on equity (net inome/average equity) 10.37% 6.09% 7.42% 8.70% 9.05% Stockholders Equity 60.0 60.0 60.0 60.0 60.0 60.0 Retained Earnings 6.6 8.4 9.6 10.6 12 13.8 Total equity 66.6 68.4 69.6 70.6 72.0 73.8 Note: Wherever average of two years figures are to be used the ratio has not been (cannot be) calculated for the 1st year.
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