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Annual Report Quixote Consulting: Highlights President Lett

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

2. Asset Turnover = Revenue

3. Return on Assets = Net Income
Total Assets

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

Fees Earned $12,425

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
Current Assets
Cash 8,875
Accounts Receivable 3,450
Supplies 1,020
Prepaid Rent 3,000
Prepaid insurance 1,650
Noncurrent Assets
Office Equipment 9,300
Less: Accumulated Depreciation 500 8,800
Total Assets $26,795

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

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.