ASSETS are everything you’ve got — cash in the bank, inventory, machines, buildings — all of it.

ASSETS are also certain “rights” you own that have a monetary value … like the right to collect cash from
customers who owe you money.

Current Assets

By definition, CURRENT ASSETS are those assets that are expected to be converted into cash in less than 12
months.

CURRENT ASSET groupings are listed in order of liquidity with the most easy to convert into cash listed first: (a)
CASH, (b) ACCOUNTS RECEIVABLE, (c) INVENTORY, and (d) PREPAID EXPENSES.

Current Assets: Prepaid Expenses

PREPAID EXPENSES are things like prepaid insurance premiums, prepayment of rent, deposits paid to the
telephone company, salary advances, etc

More Asset Types

In addition to a company’s current assets, there are two other major asset groups listed on the Balance Sheet:
OTHER ASSETS and FIXED ASSETS. These so-called “non-current assets” are not converted into cash during the
normal course of business.

Fixed Assets at Cost

Fixed assets commonly include land, buildings, machinery, equipment, furniture, automobiles, trucks, etc.

Other Assets

For example, a patent, a copyright, or a brand name can have considerable value to the enterprise, yet these are
not tangible as a machine or inventory is.
Current Liabilities

CURRENT LIABILITIES are grouped depending on to whom the debt is owed: (a) ACCOUNTS PAYABLE owed to
suppliers, (b) ACCRUED EXPENSES owed to employees and others for services, (c) CURRENT DEBT owed to lenders
and (d) INCOME TAXES PAYABLE owed to the government.

Accrued Expenses

Examples of ACCRUED EXPENSES are salaries earned by employees but not yet paid to them, lawyers’ bills not yet
paid, interest due but not yet paid on bank debt and so forth.

Current Debt and Long-Term Debt

If the enterprise owes money to a bank and the terms of the loan say it must be repaid in less than 12 months,
then the debt is called a note payable and is a current liability.

A loan with an overall term of more than 12 months from the date of the Balance Sheet is called LONG-TERM
DEBT. A mortgage on a building is a common example.
ROE – return on equity Profit or loss ROE  ROA  Equity multiplier
ROE  Profit or loss Total assets
Shareholders' Equity  
Total assets Equity

ROA – return on assets ROA = Profit or Loss / Total assets

NOPAT – net operation profit after tax

NİPAT – net investment profit after tax

ROBA – return on business assets

EBITDA margin = EBITDA(PBITDA) / Revenue

Average Account Receivable Turnover = ( begin A/R + end A/R ) / 2

A/R turnover = Credit Sales / Average A/R

A/R days = 365 / A/R turnover

Beg = 30000 Average Account Receivable Turnover = ( 30000 + 40000)/ 2 = 35000

End = 40000 A/R turnover = 150000 / 35000 = 4,2

Sales = 150000 A/R days = 365 / 4,2 = 86,9 ( Мы получаем нашу дебиторскую
задолженность через каждые 87 дней)

Average Inventory Turnover = (begin Inventory + end Inventory) / 2

Inventory Turnover = Purchases / Average Inventory Turnover or COGS / Average Inventory Turnover

Inventory days = 365 / Inventory Turnover

Average Account Payable Turnover = (begin A/P + end A/P) / 2

A/P Turnover = Liability / Average A/P Turnover

A/P days = 365 / A/P Turnover

Cash = 67580

Trade receivable or A/R = 28800

Current liabilities or (current debt + non-current debt) = 21000

Shareholder`s equity (то есть только capital без net income) = 100000
Quick ratio = 67580 + 28800 / 21000 = 4,59

Liabilities to equity ratio = 21000/ 100000 = 0,21

Debt to equity ratio = 21000 / 100000 = 0,21

Debt to capital ratio = 21000 / 121000 = 0,17

Inventory Turnover and days, A/R Turnover and days

Begin balance for the Inventory was 100000$. During the year company sold 80000$ of goods for 160000$.

The ending balance for the goods was 60000$. Company expects to receive for the end of the year 60000$

Beginning for the receivables was 30000$. Find Inventory Turnover and days, A/R Turnover and days

Average A/R Turnover = (30000 + 160000 – 60000) /2 = 65000

A/R Turnover = 160000 / 65000 = 2,46

A/R days = 365 / 2,46 = 148,3

Average Inventory Turnover = (100000 + 60000) / 2 = 80000

Inventory Turnover = 80000 / 80000 = 1

Inventory days = 365 / 1 = 365

Inventory Turnover and days, A/P Turnover and days

For the start of the period company has of balance inventory 10000$, A/P 15000$. During the period company

purchased on account 60000$ goods, and sold 40000$. Find Inventory Turnover and days, A/P Turnover and

days.

Average Inventory Turnover = (10000 + 30000) / 2 = 20000 (end inv turnover = 10000 + 60000 – 40000 = 30000)

Inventory Turnover = 40000 / 20000 = 2

Inventory days = 365 / 2 = 182,5

Average A/P Turnover = (15000 + 60000) / 2 = 37500

A/P Turnover = 60000 / 37500 = 1,6

A/P days = 365 / 1,6 = 228,1

TASK 1

Capital 100000$, rented office -monthly fee 1000$, total hired employees month salary 7000$, purchased

equipment 5000$ on account, was supplied with goods that costed 40000$ half by cash. During the week

company sold 80% of the goods with 70% mark up. Customers post on the payment. Utility expenses 200$

immediately paid, depreciation of the equipment 100$ per month, profit tax 10%.

Income statement

Revenue = 40000 * 0,8 * 1,7 = 54400

COGS 40000 * 0,8 = 32000

Gross profit = 54400 – 32000 = 22400

Expenses: rent – 1000, utilities – 200, salaries – 7000, depreciation – 100.

Profit before tax = 22400 – 8300 = 14100

Profit tax = 14100 * 0,1 = 1410

Net profit = 14100 – 1410 = 12690

Profit margin = 12690 / 54400 = 0,23 %

Balance sheet

Assets Liability Equity

Cash 79800 Salary 7000 Capital 100000

A/R 54000 Rent 1000 Net profit 12690

Goods 8000 Tax 1410

Equipment 5000 A/P(equipment) 5000

Depreciation 100 A/P (goods) 20000

Cash = 100000 – 20000 – 200 = 79800

Total assets = 147100 L + E = 147100

TASK 2

The company`s capital 60000$. Company rented office for 700$ per month. Hired employees month salary 5000$
total, purchased an office for 15000$ by cash. Was supplied with goods for 30000$ on account. At the end of the
month company sold all the goods with 60% mark up. Customers paid all by cash. Utility 100$, profit tax 10%.

Income statement

Revenue = 30000 * 1,6 = 48000

COGS = 30000

Gross profit = 48000 – 30000 = 18000

Expenses = utility – 100, rent – 700, salary – 5000.

Profit before tax = 18000 – 5800 = 12200

Profit tax = 12200 * 0,1 = 1220

Net profit = 12200 – 1220 = 10980

Assets Liability Equity

Cash 93000 Salary 5000 Capital 60000

Office 15000 Utility 100 Net profit 10980

Rent 700

A/P 30000

Tax 1220

Cash = 60000 + 48000 – 15000 = 93000

Total assets 108000 L + E = 108000

TASK 3

During the second month company received back 60% of receivables, payed out full of : account payable, salary
payable, and tax payable. Purchased for 30000$ goods by cash. Monthly salary 8000$, monthly utility 200$, profit
tax 10%. Sold 70% of goods with 80% of mark up. Customers payed 60% by cash.

Income statement

Revenue = (30000 + 15000) * 0,7 * 1,8 = 56700

COGS = 45000 * 0,7 = 31500

Gross profit = 56700 – 31500 = 25200

Expenses: salary – 8000, utility – 200

Profit before tax = 25200 – 8200 = 17000

Profit tax = 17000 * 0,1 = 1700

Net profit = 17000 – 1700 = 15300

Balance sheet

Cash = 70000 – 30000 – 36000 + 25000*0,6 + 56700*0,6 = 53020

A/R = 25000 – 25000*0,6 + 56700*0,4 = 32680

Goods = 45000 – 31500 = 13500

Net profit = 15000 + 15300 = 30300

TASK 4

Company`s capital consist of cash 100000$ and office 50000$. Hired employees with monthly salary total 6000$.
Purchased computers for 20000$ half by cash. During the month company provided consulting services amounting
to 20000$. Customers paid 15000$ by cash. Depreciation for the office was 200$, for the computers 300$. Profit
tax 5%.

Income statement

Revenue = 20000

Expenses: depreciation – 200 + 300, salary – 6000

Profit before tax = 20000 – 6500 = 13500

Profit tax = 13500 * 0,05 = 675

Net profit = 13500 – 675 = 12825

Balance sheet

Assets Liability Equity

Cash 105000 Salary 6000 Capital 150000

Office 50000 Tax 675 Net profit 12825

Computers 20000 A/P 10000

A/R 5000

Dep 500

Cash = 100000 – 10000 + 15000 = 105000

Total assets 179500 L + E = 179500

TASK 5
Company received 60% of receivables, paid out salary payable, A/P, half of tax payable and utilities payable in full.
Purchased goods for 45000 on account. Concluded a contract for provision of shipment services for 1 year and
received an advance payment in the amount of 40000. Sold 60% of goods with 70% mark up, customers paid 50%
by cash. Accrued salary was 12000, recognized rent and insurance for current month. Interest rate for loan is 12%
per year accrued and paid for current month. Depreciation for equipment for month is 300. Profit tax rate is 10%
accrued.

Income statement

Revenue = (45000 + 35000) * 0,6 * 1,7 = 81600

COGS = 80000 * 0,6 = 48000

Gross profit = 81600 – 48000 = 33600

Expenses: salary – 12000, rent – (3000/3) 1000, insurance – (12000/12) 1000, interest - (90000 * 0,12)/12 = 900,
depreciation – 300

Profit before tax = 33600 – 12000 – 1000 – 1000 – 900 – 300 = 18400

Profit tax = 18400 * 0,1 = 1840

Net profit = 18400 – 1840 = 16560

Balance sheet

Cash = 80000 – 10000 – 18000 – 6000 – 7000 + 40000 + 25000 * 0,6 – 900 + 81600 * 0,5 = 133900
A/R = 25000 – 25000 * 0,6 + 81600 * 0,5 = 30800

Inventory = 35000 + 45000 – 48000 = 32000

TASK 6

Company has the capital 300000$ of which 60000$ relates to office and 40000$ to equipment. The company hires
employees with monthly salary 15000$. During the month company have foreign expenditures (затраты):
purchase of goods 60000$ by cash, payment for transportation 2000$ by cash, depreciation of the building 200$
per month, depreciation of equipment 100$ per month. Accrued (накопленный, ещё не оплаченный) utilities
400$. Marketing expenditures 4000$ by cash. Sales commissions 8000$. The company sold 80% of the goods with
60% mark up. Customers paid all by cash, tax rate 10%.

Income statement

Revenue = 60000 * 0,8 * 1,6 = 76800

COGS = 60000 * 0,8 = 48000

Gross profit = 28800

Expenses: salary – 150000, depreciation – 200 +100, utilities – 400, sales commissions – 8000, marketing ex – 4000,
transportation – 2000.

Loss = 28800 – 29700 = 900

Balance sheet

Assets Liability Equity

Cash 210800 utility 400 capital 300000

Office 60000 sales comm 8000 loss (-900)

Equipment 40000 salary 15000

Depreciation 300

A/R 12000

Cash = 200000 – 60000 – 2000 – 4000 + 76800 = 210800

Total assets 322500 L + E = 322500

TASK 7

The company`s capital is 100000$. Company rented office and paid for 5 months in advance 5000$. Hired
employees with monthly salary 6000$. Purchased goods for 50000$ by cash. Concluded a contract for provision of
services for 1 year for 12000$ and received the full payment. During the month company sold 80% of the goods
with 60% mark up. Customers paid half of the amount. At the end of the month company paid utilities 200$, sales
commissions 2000$. Tax rate 10% and paid.
Income statement

Revenue = 50000 * 0,8 *1,6 =64000

COGS = 50000 * 0,8 = 40000

Gross profit = 24000

Expenses: salary – 6000, utility – 200, sales commissions – 2000, rent – 5000 / 5 = 1000

Profit before tax = 24000 – 9200 = 14800

Profit tax = 1480

Net income = 13320

Balance sheet

Assets Liability Equity

Cash 85320 unordered revenue 12000 capital 100000

Prepared rent 4000 salary 6000 net profit 13320

A/R 32000

Goods 10000

Cash 100000 – 2000 – 200 – 50000 + 32000 – 1480 – 5000 + 12000 = 85320

Total assets 131320 L + E = 131320

2nd month

Company received back all the receivables, paid salaries. Provided services to customers and recognized 10% of
the amount. Purchased goods for 30000$ by cash. Purchased truck for 11000$ by cash. Sold 70% of goods with
60% mark up. Customers paid all by cash. At the end of the month company paid utilities 200$. Salaries accrual
were 7000$ and tax rate was 10%.

Income statement

Revenue = (30000 + 10000) * 0,7 * 1,6 = 44800

COGS = 40000 * 0,7 = 28000

Gross profit = 44800 – 28000 = 16800

Other income = 12000 * 0,1 = 1200

Expenses: salary – 7000, utility – 200, rent – 1000

Profit before tax = 18000 – 8200 = 9800

Profit tax = 980

Net income = 9800 – 980 = 8820

Balance sheet

Assets Liability Equity

Cash 114920 salary 7000 capital 100000

Truck 11000 tax 980 net profit 13320

Prepared rent 3000 unearned 10800 net profit 8820

Goods (10000 + 2000) 12000

Cash = 85320 – 6000 – 200 + 32000 – 11000 – 30000 + 44800 = 114920

Total assets 140920 L + E = 140920

TASK 8

Company`s capital 70000$. Company rented office and prepaid for 3 month 1500$. Hired employees with monthly
salary 4000$. Purchased insurance for 1 year and paid 1200$. Purchased equipment for 3000$ by cash. Provided
cleaning services to customers and received 20000$ by cash. Utilities 200$, tax rate 10%.

Income statement

Revenue = 20000

Expenses: salary – 4000, rent – (1500/3) = 500, insurance – (1200/12)=100, utility – 200

Profit before tax = 20000 – 4800 = 15200

Profit tax = 1520

Net profit = 13680

Balance sheet

Assets Liability Equity

Cash 84300 salary 4000 capital 70000

Equipment 3000 tax 1520 net profit 13680

Prepared rent 1000 utility 200

Insurance 1100

Cash = 70000 – 1500 – 1200 – 3000 + 20000 = 84300

Total assets 89400 L + E = 89400

2nd month

Company paid previous month salaries, utilities, tax. Agreed with customers for provision of services within one
year for 100000$ and received the full payment in advance. At the end of the month company accrued the
following expenses: salaries 6000$, utilities 200$, marketing expenses 7000$, depreciation 200$. Tax rate 10%. At
the end of the month company recognized 20% of services.

Income statement

Revenue = 100000 * 0,2 = 20000

Expenses: salary – 6000, utility – 200, marketing expenses – 7000, depreciation – 200, rent – 500, insurance – 100

Profit before tax = 20000 – 14000 = 6000

Profit tax = 600

Net profit = 5400

Balance sheet

Assets Liability Equity

Cash 178580 salary 6000 capital 70000

Equipment 3000 utility 200 net profit 13680

Prepared rent 500 marketing ex 7000 net profit 5400

Insurance 1000 unearned 80000

Depreciation 200 tax 600

Cash = 84300 – 4000 – 1520 – 200 + 100000 = 178580

Total assets 182880 L + E = 182880