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(Answered) Balance sheet formation to know working capital requirements


"Mars Electronics is a distributor for the Global Electric Company [GEC], a large manufacturer of electrical and electronics products for consumer and institutional markets. Below are the annual financial statements of the company for the last 2 years.;Income Statements;$ thousands;12 months Ending;6/30/1999 12 Months Ending;6/30/2000;Net sales $10,655 $11,720;Cost of goods sold 8,940 9,834;Selling, general & administrative expenses 1,554 1,677;Depreciation expenses 44 76;Interest expenses 62 70;Corporate income tax 23 26;Earnings after tax $32 $37;Dividends to be paid 5 1;Balance Sheets;$ thousands;6/30/1999 6/30/2000;Assets;Cash $160 $70;Accounts Receivable 1,953 5,100;Inventories 1,986 2,085;Prepaid expenses 380 25;Net fixed assets 733 830;Total $5,212 $8,110;Liabilities & owners' equity;Short-term debt $50 $50;Accounts Payable 1,450 $1,650;Accrued Expenses 398 138;Long Term Debt 800 3,700;Owners' Equity 2,514 2,572;Total $5,212 $8,110;a. Compute Mars Electronics Working Capital Requirement (WCR) on June 30th 1999, and on June 30th 2000. Compute also the collection period and the inventories turnover for the period 6/30/99 and 6/30/00.;Working Capital - A company's current assets minus its current liabilities - considered a good measure of both a company's efficiency and its financial health. Also known as ""net working capital"".;1999: Current Assets - Current Liabilities = 5212 - 733 = 4479 - 1898 = 2581;2000: CA - CL = 8110 - 830 = 7280 - 1838 = 5442;1999: AR Turnover = Net Credit Sales / Avg AR = 10655 / 1953 = 5.46;2000: 11720 / 5100 = 2.30;1999: Inventory Turnover = Sales / Inventory = 10655 / 1986 = 5.37;2000: 11720 / 2085 = 5.62;b. Prepare Mars Electronics' managerial balance sheet on June 30th 1999,and on June 30th 2000.;Just do ITEM B only a managerial balance sheet in excel"
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Balance sheet formation to know working capital requirements

 


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