Below are the financial statements for Aspirations Pty Ltd. Statement of Financial Position at 30 June 2017 Non-Current Assets 2017 2018 2019 Plant, Property and Equipment 425,000 405,000 399,000 Current Assets Short-term Investments 0 0 4,300 Inventory 89,300 90,000 70,500 Receivables 161,800 166,500 140,400 Total Assets 676,100 661,500 614,200 Equity and Liabilities Share Capital 100,000 100,000 100,000 Revaluation Reserve 29,000 65,800 82,350 Retained earnings 214,400 286,800 384,050 Total Equity 343,400 452,600 566,400 Non-current Liabilities Loan 260,000 170,000 10,000 Current Liabilities Trade Payables 67,700 36,000 35,000 Overdraft 5,000 2,900 2,800 Total Equity and Liabilities 676,100 661,500 614,200 Statement of Comprehensive Income for the Year Ended 30 June 2019 2018 2019 Revenue 1,247,000 890,000 Cost of Goods Sold 839,500 576,000 Gross Profit 407,500 314,000 Administrative Expenses 56,800 51,000 Distribution Costs 118,700 79,000 Profit from Operations (EBIT) 232,000 184,000 Finance Cost 12,000 5,000 Profit Before Tax 220,000 179,000 Company Tax Expense 67,600 41,750 Net Income 152,400 137,250 Gain on Revaluation (OCI) 36,800 16,550 Total Comprehensive Income 189,200 153,800 Dividend approved 80,000 40,000 Required: 1. Net Income margin 2. Non-current asset turnover. In this calculation you are to use the average NCAs on the books. 3. Current ratio. In this calculation you are to use the end-of-yearnumbers.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Below are the financial statements for Aspirations Pty Ltd.
Non-Current Assets |
2017 |
2018 |
2019 |
Plant, Property and Equipment |
425,000 |
405,000 |
399,000 |
Current Assets |
|
|
|
Short-term Investments |
0 |
0 |
4,300 |
Inventory |
89,300 |
90,000 |
70,500 |
Receivables |
161,800 |
166,500 |
140,400 |
Total Assets |
676,100 |
661,500 |
614,200 |
Equity and Liabilities |
|
|
|
Share Capital |
100,000 |
100,000 |
100,000 |
Revaluation Reserve |
29,000 |
65,800 |
82,350 |
|
214,400 |
286,800 |
384,050 |
Total Equity |
343,400 |
452,600 |
566,400 |
Non-current Liabilities |
|
|
|
Loan |
260,000 |
170,000 |
10,000 |
Current Liabilities |
|
|
|
Trade Payables |
67,700 |
36,000 |
35,000 |
Overdraft |
5,000 |
2,900 |
2,800 |
Total Equity and Liabilities |
676,100 |
661,500 |
614,200 |
Statement of Comprehensive Income for the Year Ended 30 June 2019
|
2018 |
2019 |
Revenue |
1,247,000 |
890,000 |
Cost of Goods Sold |
839,500 |
576,000 |
Gross Profit |
407,500 |
314,000 |
Administrative Expenses |
56,800 |
51,000 |
Distribution Costs |
118,700 |
79,000 |
Profit from Operations (EBIT) |
232,000 |
184,000 |
Finance Cost |
12,000 |
5,000 |
Profit Before Tax |
220,000 |
179,000 |
Company Tax Expense |
67,600 |
41,750 |
Net Income |
152,400 |
137,250 |
Gain on Revaluation (OCI) |
36,800 |
16,550 |
Total Comprehensive Income |
189,200 |
153,800 |
Dividend approved
|
80,000 |
40,000 |
Required:
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