Reference no: EM13863125

1. The following financial data (in thousands of dollars) are for the month of June 2012 for All-Go Pty Ltd. Use this information to answer the questions below.

Present Situation, 30th June 2012
Account	Balance
Bonds payable (20-year)	$146,000
Buildings (net value)	605,000
Cash on hand	21,000
Creditors	42,500
Debtors	35,000
Dividends payable	9,500
Inventory value (all inventories)	38,000
Issued shares	375,000
Land value	680,000
Long-term mortgage	558,000
Retained earnings	248,000

Note: bonds are certificates of debt issued in order to raise funds. They carry a fixed rate of interest and are repayable with or without security at a specified future date. They used to be quite common.

Transactions for June 2012
Category			Amount
Direct labour			$60,000
Expenses
Insurance	$24,000
Selling	74,000
Rent and lease	48,000
Salaries	132,000
Other		74,000
Total			352,000
Income taxes			24,000
Increase in finished goods inventory			30,000
Materials inventory
at 315' May 2012			55,000
at 30th June 2012			30,000
Materials purchases			24,000
Overhead charges			90,000
Revenue from sales			600,000

a) Use the above information to construct a Balance Sheet for All-Go as of 30th June 2012

b) What was the net change in materials inventory during the month?

c) Use the above information to develop a Profit and Loss Statement for the month of June 2012

d) What percentage of revenue is reported as after-tax income?

e) Compute the value of each of the following common business ratios:

Liquidity ratio

Quick assets ratio

Gearing ratio

f) Compute the turnover of inventory ratio (based on gross sales) for All-Go and suggest a meaning for this ratio. (It may be assumed that the average finished goods inventory is worth $38,000 for the period of interest).

2. A successful building contractor purchased a farm to operate on a part-time basis and raise beef cattle. The purchase price of the farm was $1,000,000. The contractor paid $400,000 cash and financed the remainder over ten years at a 7% interest rate with a mortgage, payable to a local bank. Soon after the purchase of the farm, the contractor purchased breeding cattle for $120,000, paid $50,000 in cash, and gave a promissory note to the seller for the balance. The note carried an 8% annual interest rate and was to be paid off within five years. During the first full year, the farm operation resulted in the following revenues and expenses.

Calves sold	$80,000
Hay sold	2,500
Labour expenses	$10,000
Expenses for machinery rented	24,000
Vetinarian fees	3,500
Fertilizer purchased	12,000
Property taxes	5,500
Expenses for repairs	4,500
Internal expenses	49,000
Expenses for miscellaneous supplies	2,500

Note: internal expenses represent the costs associated with contributions from other parts of the contractor's businesses to the farm operation. An example would be the use of his staff and equipment to create a dam.

Prepare a Profit and Loss Statement for the farming operation and determine the net profit (loss) before income taxes.

Questions are adapted from Szonyi, Ai, Fenton, R.G., White, J.A., Age, M.H. and Case, K.E., Principles of Engineering Economic Analysis, Canadian edition, John Wiley & Sons, 1982, and Blank, I. and Tarquin, A., Engineering Economy, 6th edition, McGraw-Hill, 2005