Income Statement
| Sales |
345 |
|
| Cost of goods sold |
255 |
|
| Gross profits |
90 |
|
| Expenses | ||
| Sales Expenses |
18 |
|
| General and administrative expenses |
22 |
|
| Lease expenses |
4 |
|
| Depreciation |
25 |
69 |
| Operating Profits |
21 |
|
| Interest expenses |
3 |
|
| Profit before tax |
18 |
|
| Tax |
6.3 |
|
| Net profit after tax |
11.7 |
EPS = Net Income/ Shares Outstanding
=11700000/4250000
=2.75
An income statement can also be called a profit and loss statement since it indicates the profits that a business generates in a period. The two terms can be used interchangeably to mean the same thing since the statement shows the net income or the profits generated by an entity in the period under review. The term balance in the balance sheet means that the figures in the statement are the balances as per that date when the statement was prepared. It implies that the same can change over time. the two halves of a balance sheet must balance because the assets of an entity are either bought using the contributions from the shareholders or they can be acquire from debt.
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CS Industries Statement of Retained earnings
| Retained earnings |
25.32 |
| Ordinary dividends |
0.9625 |
| Prefered Dividends |
3.75 |
|
20.6075 |
|
| Profit after tax |
5.15 |
| Retained profits 2016 |
25.7575 |
The claim by Sky Metal Inc CEO that the firm will soon be profitable can be true based on the historical performance of the company and the current management practices. The company for example uses state of the art technology to produce any product. Similarly, the company uses lean manufacturing which implies that the firm can easily lower its production cost and be profitable. The current ratio further sholws that the company can easily settle its near term olbligations when they fall due. However, the quick ratio indicates that the company is holding less liquid assets affecting the quick ratio in the past three years.
ROE = profit margins* total assets turnover*leverage ratio
=4.5%*0.72*1.43
=4.6332%
DuPont system has a major advantage in that it shows a clear picture of the performance of a company and its financial health. It factors in the profitability of a company its operational efficiency and the financial leverage. It therefore provides an accurate assessment of the changes in a company’s operations that affect its ROE.
