Question 1 (15 marks) (Working with financial statements) Based on the information for the T. P. Jarmon Company for the year ended December 31, 2015:
a)How much is the firm’s net working capital, and what is the debt ratio?
b)Complete a statement of cash flows for the period. Interpret your results.
c)Compute the changes in the balance sheets from 2014 to 2015.
What do you learn about T. P. Jarmon from these computations?
How do these numbers relate to the statement of cash flows?
Assets 20142015
Cash $15,000 $14,000
Marketable Securities 6,000 6,200
Accounts receivable 42,000 33,000
Inventory 51,000 84,000
Prepaid rent $1,200 $1,100
Total current assets $ 115,200 $ 138,300
Net plant and equipment 286,000 270,000
Total assets $ 401,200 $ 408,300
Liabilities and Equity20142015Account payable $ 48,000 $ 57,000
Accruals 6,000 5,000
Notes Payable 15,000 13,000
Total current liabilities $ 69,000 $ 75,000
Long term debt $ 160,000 $ 150,000
Common stockholders’ equity $ 172,200 $ 183,300
Total liabilities and equity $ 401,200 $ 408,300
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