Evaluate the profitability of that company

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Reference no: EM133538055

Question: Your organization operates several enterprises, including a durable medical equipment company. Your chief executive officer (CEO) has asked you to evaluate the profitability of that company. Your CEO would like an income statement and a statement of cash flows for the previous year, as well as a balance sheet representing the worth of the company at year's end. He has given you the following information:

The company began the year with a cash balance of $475,000.

The company had gross sales last year of $1,545,000, of which $975,000 was received as cash from sales. The cost of goods sold was $325,000. There were no other sources of cash or revenue.

To support its operations, the company spent $1,750/month on rent, $275,000 on salaries, $82,500 on benefits, $4,500 on supplies, $475/month on truck rentals, $1,250 on truck maintenance and gas, $4,750 on insurance, $10,250 on marketing, $8,600 on phone and Internet, $1,400 on software licenses, and $2,750 in loan repayments to the parent organization. It had other miscellaneous expenses totaling $6,420, and it had to pay taxes on earnings at the rate of 30%.

At the conclusion of the year, the company had $475,000 in accounts receivable

Reference no: EM133538055

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