1. Create Funds statements for 2001, 2002 and 2003.
2. Calculate the following ratios for 2000: Current ratio, Quick ratio, Inventory turnover ratio, Gross profit Margin, Net profit margin, ROA, Asset turnover ratio, fixed asset turnover ratio, debt ratio, and the times interest earned ratio.
3. Calculate the Debt ratio and the current ratio for 2000, 2001, 2002 and 2003. Compare the ratios over the 4-year period and explain any trends you see and any deviations from that trend.
4. Bob has reason to believe that the company will grow their sales by 10% from 2003 in 2004. Create a budgeted Income Statement for Joe and Mary's Dog Food Company for 2004. Assume that the cost structure that was in place for the company with regards to fixed cost and interest expense will be the same in 2004 as it was in 2003, and that the firms variable costs will continue to be 40% of total sales. The company is the 35% tax bracket.
5. What would the company's dividend payment be for 2004? How much of the dividend was paid out to Joe and Mary if they did not own any shares of the firm's common stock. Ignore the taxes that would be paid on the dividend payment.
The solution shows all the calculations used to compute the answers to the questions.