The financial statements in case 1 of Boat Builders need to have some adjustment. As the DSFE owe $280,000 to the company, thus the debtors figure in the Balance Sheet should be add on $280,000 to $35,168 and equal to $315,168. Therefore, the c Current year’s total current assets should be $387,717 instead of $107,717 and total assets should be $637,178 rather than $357,178. Besides that, The Interest ought to be $6,004.8 which is ten percent of the $6, 0048 fixed term loan 2 rather than $838. Additionally there are not procurements made for tax assessment on the company's overdraft. A. Short- term Liduidity Ratios i. Current Ratio= Current Assets ÷ Current Liabilities Last Year Current Ratio: $134,085 ÷ $102,031 = 1.314 Current Year Current …show more content…
Fixed Assets to Shareholder’s equity ratio: Fixed Assets ÷ Shareholders’ funds Last Year: $136,560 ÷ $105 = 1300.57 Current Year: $249,461 ÷ $13,937 = 17.899 Fixed Assets to Shareholder’s equity ratio measures the contribution of stockholders and the contribution of debt sources in the fixed assets of the company. The last year fixed assets to shareholders equity ratio which is 1300.57, is more than current year fixed assets to shareholders equity ratio which is 17.899. Thus, this implied that company is using more debts to finance a portion of fixed asset during last year at using less debt to finance a portion of fixed asset at current year. C. Business Performance Ratios a. Gross Margin = (Sales- Costs of Goods Sold) ÷ Sales Last Year: ($418,829 - $257,514) ÷ $418,829 = 0.385 Current Year: ($1,692,538 - $1,405,299) ÷ $1,692,538 = 0.1697 The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. Last Year gross margin is 0.385, which is higher than current year gross margin, which is 0.1697. Thus, current year gross margin is lower at retains on each dollar of sales to services its other costs and