Income Statement Cline Custom Bikes Income Statement For year ended December 31,
ID: 2647342 • Letter: I
Question
Income Statement Cline Custom Bikes Income Statement For year ended December 31, 2000 Sales revenue $2,200,000 Less Cost of goods sold 1,420,000 Gross profit 780,000 Less operating expenses Selling expense 300,000 G&A 270,000 Depreciation 30,000 Total operating expenses 600,000 Operating profits 180,000 Less interest expense 29,000 Net profit before tax 151,000 Less taxes (30%) 45,000 Net profit after tax (Earnings Available to Common Stockholders) 106,000 Statement of Retained Earnings Retained Earnings balance (Jan 1 2000) 80,000 Plus: net profit after tax (for 2000) 106,000 Less cash dividends on common (76,000) Retained Earnings balance (Dec 31, 2000) 110,000 Cline Custom Bikes Balance Sheet December 31 2000 1999 Assets Current assets Cash $30,000 $50,000 Marketable Securities 10,000 20,000 Accounts receivable 320,000 350,000 Inventory 480,000 320,000 Total Current Assets $840,000 $740,000 Gross Fixed Assets 560,000 520,000 Less accumulated depreciation 180,000 150,000 Net fixed assets 380,000 370,000 Total Assets $1,220,000 $1,110,000 Liabilities & stockholders Income Statement Cline Custom Bikes Income Statement For year ended December 31, 2000 Sales revenue $2,200,000 Less Cost of goods sold 1,420,000 Gross profit 780,000 Less operating expenses Selling expense 300,000 G&A 270,000 Depreciation 30,000 Total operating expenses 600,000 Operating profits 180,000 Less interest expense 29,000 Net profit before tax 151,000 Less taxes (30%) 45,000 Net profit after tax (Earnings Available to Common Stockholders) 106,000 Statement of Retained Earnings Retained Earnings balance (Jan 1 2000) 80,000 Plus: net profit after tax (for 2000) 106,000 Less cash dividends on common (76,000) Retained Earnings balance (Dec 31, 2000) 110,000 Cline Custom Bikes Balance Sheet December 31 2000 1999 Assets Current assets Cash $30,000 $50,000 Marketable Securities 10,000 20,000 Accounts receivable 320,000 350,000 Inventory 480,000 320,000 Total Current Assets $840,000 $740,000 Gross Fixed Assets 560,000 520,000 Less accumulated depreciation 180,000 150,000 Net fixed assets 380,000 370,000 Total Assets $1,220,000 $1,110,000 Liabilities & stockholdersExplanation / Answer
What were the current ratios for BOTH 1999 and 2000?
In 1999
Current Ratio = Current Asset/Current Liabilty
Current Ratio = 740000/780000
Current Ratio = 0.95
In 2000
Current Ratio = Current Asset/Current Liabilty
Current Ratio = 840000/860000
Current Ratio = 0.98
Was their current ratio for year 2000 better or worse compared to 1999
In year 2000 Current Ratio is better than compared to 1999 as its current ratio increased