Part C. Cullumber Appliances Corporation has reported its financial results for the year ended December 31, 2017. Cullumber Appliances Corporation Income Statement for the Fiscal Year Ended December 31, 2017 Net sales $ 5,899,512,000 Cost of goods sold 3,224,958,940 Gross profit $ 2,674,553,060 Selling, general, and administrative expenses 1,101,893,423 Depreciation 334,776,116 Operating income $ 1,237,883,521 Interest expense 32,014,500 EBT $ 1,205,869,021 Income taxes 320,866,566 Net earnings $ 885,002,455 Cullumber Appliances Corporation Balance Sheet as of December 31, 2017 Assets: Liabilities Equity: Cash and cash equivalents $ 642,840,000 Short-term borrowings $ 98,332,398 Accounts receivable 1,161,885,300 Trade accounts payable 421,708,488 Inventory 1,178,570,300 Other current liabilities 814,072,037 Other current assets 366,013,300 Total current assets $ 3,349,308,900 Total current liabilities $ 1,334,112,923 Net fixed assets 875,086,233 Long-term debt 1,302,143,673 Goodwill 123,956,553 Common stock 456,815,514 Other assets 817,404,946 Retained earnings 2,072,684,522 Total assets $ 5,165,756,632 Total liabilities and equity $ 5,165,756,632 Current ratio 2.51, Quick ratio 1.62 Inventory turnover ratio = 2.74 TIMES Account receivables turnover ratio = 5.08 times DSO = 71.85 days Asset Turnover Ratio_______times Fixed Asset Turnover________times
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.
Part C.
Cullumber Appliances Corporation has reported its financial results for the year ended December 31, 2017.
Cullumber Appliances Corporation
Income Statement for the Fiscal
Year Ended December 31, 2017
Net sales $ 5,899,512,000
Cost of goods sold 3,224,958,940
Gross profit $ 2,674,553,060
Selling, general, and administrative expenses 1,101,893,423
Operating income $ 1,237,883,521
Interest expense 32,014,500
EBT $ 1,205,869,021
Income taxes 320,866,566
Net earnings $ 885,002,455
Cullumber Appliances Corporation
Balance Sheet as of December 31, 2017
Assets: Liabilities Equity:
Cash and cash equivalents $ 642,840,000 Short-term borrowings $ 98,332,398
Inventory 1,178,570,300 Other current liabilities 814,072,037
Other current assets 366,013,300
Total current assets $ 3,349,308,900 Total current liabilities $ 1,334,112,923
Net fixed assets 875,086,233 Long-term debt 1,302,143,673
Other assets 817,404,946
Total assets $ 5,165,756,632 Total liabilities and equity $ 5,165,756,632
Inventory turnover ratio = 2.74 TIMES
Account receivables turnover ratio = 5.08 times
DSO = 71.85 days
Asset Turnover Ratio_______times
Fixed Asset Turnover________times
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