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# Mercy Inc. Ratios, Silver Manufacturing Cash Budget

Mercy Inc. has submitted to you a BS summary data for 2008 and 2009.

The company recorded a Net Income in millions of \$212 for 2009

MERCY INC.

Condensed Balance Sheets

December 31, 2008 and 2009

2009 2008

Cash \$ 325 \$ 300

Marketable Securities 175 175

Accounts Receivable 44 24

Goodwill & Patterns 233 133

Current Assets \$ 777 \$ 632

Other Assets 1,283 1,545

Total Assets \$ 2,060 \$ 2,177

====== ======

Current Liabilities \$ 655 \$ 805

Long Term Liabilities 565 575

Owners' Equity 840 797

Total Liabilities & Owners' Equity \$ 2,060 \$ 2,177

====== ======

Based on the information provided, calculate the following financial measures for 2009.

Return on investment (ROI) =
Return on Equity (ROE) =
Working Capital =
Current Ratio =
Acid-Test Ratio =
Debt Ratio =
Debt/Equity Ratio =

2. Complete the "First Quarter Cash Budget" for the following Company with the following disclosed data and industry benchmark rates:
(Math not needed)

January February March

SALES : \$ 320,000 \$ 372,000 \$ 404,000

60% of sales are Cash Receipts in the first month. 40% is received the following month
40% of the December 2008 sales of \$ 300,000 are paid in January
Investment Activities: The Company has investments returning \$5,500 every month
COGS: 62% of sales
Accounts Payable: January: \$ 58,000 February: \$ 43,000 March: \$ 45,000
The company pays 80% on the month due and 20% the following month.
No accounts payable are due from December 2008.
Interest on notes: Due a week before the end of the quarter = \$1,245.00
Income Taxes: Due on February 25, 2009 = \$4,500.00
Dividends for the year 2007:
Dividends are paid to the Shareholders on January 01, 2009 = \$15,250.00
Payroll: January = \$32,750 February = \$34,750 March = \$36,500
Advertising: The Company has a firm contract with an advertising agency for \$50,000
It pays said agency 25% every second month in a quarter.

SILVER MANUFACTURING

Cash Budget

For the First Quarter of 2009

January February March

---------------------------------------------------------------------------------------------------------

Beginning Cash Balance ...... \$122,250 \$ \$

CASH Receipts:

Current Cash Sales \$ \$ \$

Cash Sales from prior month

Investment returns

_________ ___________ ___________

Total Cash Available: \$ \$ \$

CASH Disbursements:

For Cost of Goods sold \$ \$ \$

Current Accounts Payable

A/P due from prior month

Interest on notes

Income Taxes

Dividends Paid

Payroll

_________ ____________ ___________

Total Cash Disbursements \$ \$ \$

_________ ____________ ___________

Ending Cash balance \$ \$ \$

======== ========== ==========

#### Solution Preview

Your tutorial is attached giving you the ratios, both numerator and denominator, and computing the ...

#### Solution Summary

Your tutorial is attached giving you the ratios, both numerator and denominator, and computing the ratios. I used "average assets" and "average equity" as that is most common. Some books just use current year assets and equity (which you can change and the amounts update automatically). The cash budget is shown including the detail of where the amounts came from (click in cells to see amounts).

\$2.19