Assignment Paper

WORKING CAPITAL MANAGEMENT
COURSE WORK
Please, answer below questions.
1) Below financial statements of Company A is given:
COMPANY A – Balance Sheet (end of year)
Assets Liabilities and Owners’ Equity
65,000,000
5,000,000
15,000,000
27,500,000
15,000,000
Current assets
Cash
Short term investments
Accounts receivable
Inventory
Prepaid expenses 2,500,000
Fixed assets 60,000,000
Plant and equipment (at cost)100,000,000
Less: Depreciation (40,000,000)
Total Assets 125,000,000
22,500,000
15,000,000
6,000,000
1,500,000
40,000,000
20,000,000
20,000,000
62,500,000
10,000,000
52,500,000
125,000,000
Current liabilities
Accounts payable
Notes payable
Accrued expenses
Long term liabilities
Bonds payable
Mortage payable
Owners’ equity
Common stock
(50,000 shares)
Retained earnings
Total liabilities and
net worth
COMPANY A – Income Statement (end of year)
150,000,000
(100,000,000)
50,000,000
(20,000,000)
(5,000,000)
25,000,000
(4,000,000)
21,000,000
(7,350,000)
Sales
Less: Cost of goods sold
Gross profits
Less: Selling and administrative expense
Less: Depreciation expense
Operating profit
Less: Interest expense
Earnings before taxes
Less: Corporate taxes (at 35%)
Net income after taxes 13,650,000
Please, calculate and comment ratios: current ratio, quick ratio,
receivables turnover, average collection period, inventory turnover,
inventory turnover days and return on equity.
2) According to your opinion, describe the role and importance of
receivables factoring.