Share
Explore BrainMass

# Ratio analysis, analysis of financial statement

Based on the table below how do I complete a balance sheet and income statements?

The vice president asks you to create a financial income statement and balance sheet for TMI for the combined years of 2004 and 2005. Use this information to calculate the following ratios:

net margin
return on investment
return on equity

-------------
2004/2005 Activity 2004 2005 Total
1 Received cash from the issue of common stock 500,000 500,000 0 500,000
2 Paid startup costs 50,000 0 50,000
3 Paid for research and development costs 10,000 0 10,000
4 Bought raw materials to manufacture fixtures 125,000 365,000 490,000
5 Paid salaries to selling and office employees 90,000 93,000 183,000
6 Paid wages to production workers 115,000 330,000 445,000
7 Bought office furniture and equipment 15,000 0 15,000
8 Bought manufacturing equipment 100,000 0 100,000
9 Posted depreciation on office furniture 2,200 2,200 4,400
10 Posted depreciation on manufacturing equipment 10,000 10,000 20,000
11 Paid rent on manufacturing facility 24,000 24,000 48,000
12 Paid utility cost on manufacturing facility 7,200 18,000 25,200
13 Realized sales for manufacture & installation
of retail store fixtures 410,000 1,200,000 1,610,000
14 Realized sales for the design of fixtures and
retail stores 100,000 300,000 400,000
15 Paid rent on office building 6,000 6,000 12,000
16 Paid utility cost on office building 1,200 1,200 2,400
17 Paid advertising costs 5,000 12,000 17,000
18 Cost of goods sold 208,243 741,866 950,109
---------------

Also, I need to write a letter to the vice president analyzing and compare these ratios year to year, including pointing out which ones have improved the most and why.

#### Solution Preview

Letter to the Vice President
Financial results show that net margin for 2005 is increased from the year 2004 because of the increase in ...

#### Solution Summary

The solution contains the preparation of Income statement, balancesheet from the information given and also contains the notes and inferences based on the analysis of the financial statements.(by use of Ratio analysis)

\$2.19