It’s your first day on the job at Webco, and you’ve come across a set of seemingly random forecasted financial information.
It’s your first day on the job at Webco, and you’ve come across a set of seemingly random forecasted financial information. Your boss asks you to make sense of it all (and you are not quite sure that you even need all the data).($ 000s) 2016 2017Other expenses 405 337Depreciation 851 883Cost of goods sold 1,788 2,006Inventory 6,441 6,596Interest 311 359Sales 5,624 5,867Accounts receivable 3,436 3,895Short-term notes payable 480 648Long-term debt 9,184 10,803Net fixed assets 23,225 22,858Accounts payable 2,778 2,696Cash 2,640 2,708Dividends 452 513Tax rate 32% 32%(a) Create an Income Statement for 2016 and 2017with the following captions: Sales Costs Other expenses Depreciation EBIT Interest EBT Taxes Net Income Dividends Addition to Retained Earnings(b) Create a Balance Sheet for 2016 and 2017.(c) Provide a plausible explanation for why Shareholders’ Equity falls in 2017 despite the profit retained (“Addition to Retained Earnings”)
