Please find the attached files which contains the question and the data on supplement xlsx

Please find the attached files which contains the question and the data on supplement xlsx

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Baby Cakes International Inc
Statement of Retained Earnings
for the Years ended December 31, 2008 and 2007
December 31, 2008
December 31, 2007
Retained Earnings, January 1
$375,000
$327,000
Net income for year
68,000
67,000
Total
$443,000
$394,000
Dividends Paid
Preferred Stock
$15,000
$12,000
Common Stock
7,000
7,000
Total Dividends Paid
$22,000
$19,000
Retained Earnings December 31
$421,000
$375,000

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Baby Cakes International Inc
Income Statement
for the Years ended December 31, 2008 and 2007
2008
2007
Sales
$1,055,000
$966,000
Sales returns
1,000
3,000
Sales Allowances
1,500
1,000
Sales Discounts
2,500
2,000
Net Sales
$1,050,000
$960,000
Cost of Goods Sold
400,000
390,000
Gross Profit
$650,000
$570,000
Selling Expenses
$270,000
$275,000
Administrative Expenses
195,000
165,000
Total operating expenses
$465,000
$440,000
Income from Operations
$185,000
$130,000
Other income
20,000
15,000
$205,000
$145,000
Other expense
96,000
48,000
Income before Tax
$109,000
$97,000
Income Tax Expense
41,000
30,000
NET INCOME
$68,000
$67,000

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(This project is valued at 5% of the final grade.)
Financial Statement Analysis provides information that indicates how a company is performing.
By comparing financial statements of different years, a manager can make informed decisions
about investments, expenditures, and activities that impact revenues.
Directions
: Read the chapter in the text titled “Financial Statement Analysis.” Using the
comparative financial statements for Baby Cakes International Inc. (see
“BabyCakes_Financial_Project_Data.xls” linked in the lesson activities) , complete the
following tasks.
Note
: The market price of BabyCakes Int’l, Inc. common stock was $20 on December 31, 2008.
Part A:
Complete the 19 ratios listed below.
Determine the following measures for
2008:
1.
Working Capital
2.
Current ratio
3.
Quick ratio
4.
Accounts receivable turnover
5.
Number of days’ sales in receivables
6.
Inventory turnover
7.
Number of days’ sales in inventory
8.
Ratio of fixed assets to long-term liabilities
9.
Ratio of liabilities to stockholders’ equity
10. Number of times interest charges earned
11. Number of times preferred dividends earned
12. Ratio of net sales to assets
13. Rate earned on total assets
14. Rate earned on stockholders’ equity
15. Rate earned on common stockholder’s equity
16. Earnings per share on common stock
17. Price-earnings ratio
18. Dividends per share of common stock
19. Dividend yield
Part B:
Explain what the results of each ratio indicate about the company.
Part C:
Complete a
horizontal
analysis
for the Income Statement, and explain
your findings.
Part D:
Complete a
vertical analysis
for the Income Statement, and explain your
findings.

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