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    Annual Report Quixote Consulting: Highlights President Lett

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    Create the Financial Highlights and Presidents Letter to the Stockholders similar to what would be contained in a company's annual report.

    Companies normally issue these reports to the stockholders and other interested parties. These reports summarize the company's operating activities for the past year and plans for the future. There are many variations in the order and form for presenting the major sections of the annual report.

    Complete the Following ratios for Quixote Consulting.
    You may use formulas as needed:
    A.  Liquidity Ratios

    1. Current Ratio = Current Assets
    ----------------------
    Current Liabilities

    2. Acid Test Ratio = Cash + A/R + Short term Investments
    ------------------------------------------------
    Current Liabilities

    3. Inventory turnover = Cost of Goods Sold
    ------------------------------
    Average of Inventories

    4. Accounts Receivable turnover = Total Sales
    ------------------------------------------
    Average of Accounts Receivables

    B.  Solvency Ratios

    1. Debt to Total Asset ratio = Total Liabilities
    -------------------
    Total Equity

    2. Times-interest-earned ratio = Net Income + Interest Expense + Income Tax Expense
    ----------------------------------------------------------------------
    Interest Expense

    C.  Profitability Ratios

    1. Profit Margin = Net Income
    ---------------
    Revenue

    2. Asset Turnover = Revenue
    ------------
    Assets

    3. Return on Assets = Net Income
    ---------------
    Total Assets

    Quixote Consulting Income Statement For the Month Ended June 30, 2010

    Revenues:
    Fees Earned $12,425

    Expenses:
    Salary Expenses 920
    Rent Expense 1,500
    Supplies Expense 980
    Depreciation Expense 500
    Insurance Expense 150
    Miscellaneous Expense 450
    Total Expenses 4,500
    Net Income $7,925

    Quixote Consulting Statement of Owners Equity For the Month Ended June 30, 2010
    Dustin Larkin Capital June 1 $-
    Add: Additional Investment 20250
    Add: Net Income 7,925
    Subtotal 28,175
    Less: Drawings 4,500
    Dustin Larkin Capital June 30 $23,675

    Quixote Consulting Balance Sheet June 30, 2010
    Assets:
    Current Assets
    Cash 8,875
    Accounts Receivable 3,450
    Supplies 1,020
    Prepaid Rent 3,000
    Prepaid insurance 1,650
    17,995
    Noncurrent Assets
    Office Equipment 9,300
    Less: Accumulated Depreciation 500 8,800
    Total Assets $26,795

    Liabilities:
    Accounts Payable 1,000
    Salaries Payable 120
    Unearned fees 2,000
    Total Liabilities 3,120

    Stockholders' Equity:
    Dustin Larkin, Capital 23,675
    Total Stockholders' Equity 23,675
    Total Liabilities &
    Stockholders' Equity $26,795

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    Solution Preview

    Annual Report Quixote Consulting

    Dear Shareholders,

    It is with great pleasure that I share with you the results of the year ended June 30, 2010. We have very strong profits, solid liquidity, no long term debt, and terrific returns to report. A summary of the financial highlights are shown at the end of this letter for your review.

    First, the revenues earned, $12,425, represent quality clients that we expect to hire us for continuing projects and refer us to new clients. As our reputation grows, we also expect our revenue to grow. As you will see, the expenses of the business are extremely low, since the owner does not take a salary ...

    Solution Summary

    Your tutorial gives you a draft of 458 words, including a financial highlight sections, to get you started on this project. The letter to the president imagines a story that fits the data so takes a bit of license with the facts.

    $2.19

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