How do I find the Net Income from this Information given?
Having trouble with this problem. Carlos Ramirez and Camila Garza organized New World Book Store as a corporation; each contributed $70,000 cash to start the business and received 4,000 shares of common stock. The store completed its first year of operations on December 31, 2011. On that date, the following financial items for the year were determined: December 31, 2011, cash on hand and in the bank, $68,350; December 31, 2011, amounts due from customers from sales of books, $39,000; unused portion of store and office equipment, $72,000; December 31, 2011, amounts owed to publishers for books purchased, $12,000; one-year note payable to a local bank for $3,000, with interest due of $120. No dividends were declared or paid to the stockholders during the year. Complete the following balance sheet as of the end of 2011. (Omit the "$" sign in your response.) NEW WORLD BOOK STORE Balance Sheet At December 31, 2011 (This is the first question I had to answer, it says I got it all correct) Assets Cash: $68350 Accounts Receivable: $39000 Store and Office Equiptment: $72000 Total Assets $179350 Liabilities Accounts Payable: $12000 Notes Payable: $3000 Interest Payable: $120 (given) Total Liabilities $15120 Stockholder's Equity Contributed Captial $140000 Retained Earnings $24230 (given) Total Stockholder's Equity $164230 Total Liabilities +SE $179350 (so the equation A=L+SE works) Then it asks "What was the amount of net income for the year? (Hint: Use the retained earnings equation [Beginning Retained Earnings + Net Income − Dividends = Ending Retained Earnings] to solve for net income.)" So to solve for Net income you would use some simple algebra to rearrange the problem right? The equation would become Net Income = Ending retained earnings + Dividends - Beginning retained earnings right? In the information it says no dividends were paid to the share holders that year, so by the formula if the retained earnings are $24,230 we need to know the ending retained earnings, which i'm having trouble finding.
What are the benefits of creating a balance sheet for a business?
There are a few key benefits to creating a balance sheet for your business. 1. It can help you get a loanWhen your business needs cash one of the first things your banker or investor will want to see is your balance sheet. If you haven't created one before then good luck getting approved for a loan. The investor wants to see a clean and up to date balance sheet. Because if you don't have one, how can you manage your money? And if you don't manage your money, why would I want to loan you any of my money?But more importantly the investor wants to see if you have any equity on your balance sheet. Just like the bank won't loan you money against your house if you are upside down, an investor won't loan your business any money if you have more debt on your balance sheet than assets. 2. It can help you manage your business. The balance sheet is filled with a bunch of different accounts. Bank account, Accounts payable, Accounts receivable, Owners draw account, etc. Creating a balance sheet helps you stay on top of these accounts so they don't get out of control. For example you might discover your bank account is consistently overdrawn. Not good.Or that your accounts receivables are way past due. Not good, you should start managing that better by calling your customers more often for payment requests. Or that you are drawing out more money from the owners draw account than the business is earning. The accounts on the balance sheet need to be reviewed and analyzed at least quarterly so that you can manage them better and keep good financial health. 3. It can tell you if you're heading in the right directionThere's nothing quite like running a business for 20 years only to discover that you have nothing left to show for all of your efforts. If you have a business, you want to create a balance sheet to find out if you are building your companies value. When you create a balance sheet each quarter, you can make sure your assets are growing, debt is shrinking, and net worth is increasing.
How can I solve my financial problems?
Probably the first thing you must do is believe that you can, believe that it is possible because it is and will manifest if you unshakably believe it to be so. This is the foundation and the first step. Every morning and whenever you aren't feeling motivated, I want you to tell yourself that you can do it and it is possible and then I want you to write down what it would take you personally to make it happen. Be as detailed as possible with the math and income goals for yourself.Secondly, you need to get your budget in line. It'll always be an adjustment but having one helps keep you stress-free or rather away from unnecessary stress. If you know that you need to make $1,300 a month to survive, life is so much easier because you know now if you have it or if you don't and you can adjust accordingly. There are plenty of resources online that will help you do this. I like Budgeting Made Easy they have a free app too.Thirdly you need to track your expenses. This should help you adjust your budget better because you'll see where you spend and where you shouldn't be spending. I use an app my bank has and mostly use my debit card to buy things so I can see the transactions in real time. Most banks have this in some way, shape or form.To conclude, firstly be certain your income is enough to live on and find a way to make it so if it isn't and believe that you can do it.Secondly, create a budget, adjust as you go and most importantly; stick to it. You should also build an emergency fund.Thirdly, track your expenses.Just FYI probably everyone who has financial freedom does all of these things and the reason they got there was because of their self-discipline about their financial wellbeing. Don't be cheap but do be frugal. If it's worth spending the money, get it. It'll usually save you money in the long run. My personal tip; don't be afraid to spend more for quality food (cook at home, mostly and do research on the product to be certain that it's quality) but try to keep the overall spending low. If you buy quality food, you'll save on medical bills later on in life :)Best of luck!
What are the different statements of financial information?
There are 4 different types of financial statements:Balance sheet- it presents the financial position and of an entity at a given date. It consists of assests, liabilities and equitiesIncome statement- it presents the income and expense over a specific time ( also called profit or loss account )Cash flow- it presents the movement of cash in a specific periodStatement of changes in equity- it presents the owners of equity over a period of time ( Example- capital, dividends)
Business financial analysis?
If you are only analyzing the balance sheet (and not the income statement)... -common size balance sheet (all dollar figures are converted to % of total assets) see first link (see second link for the next two) -quick ratio: Quick ratio = (cash+ marketable securities + accounts receivables) / current liabilities -cash ratio: Cash ratio = (cash + marketable securities)/current liabilities -debt/equity -assets/equity
What are the contents of financial statement?
Financial Statements from a company give investors (or potential investors) the keys to understanding important information about the company. By analyzing financial statements, investors can obtain a look at the company's profitability, strengths and weaknesses, and potential for growth (also get an idea of management). Essentially, financial statements are for the good of those who are outside of the company.The three main statements are:1. The Balance Sheet - shows assets, liabilities and stockholder's equity at specific point in time (more of a snapshot).2. Income Statement - shows the results from a specific period of time (not a snapshot) and is comprised of key metrics such as revenues, gross margin and net margin.3. Statement of Cash Flows - reports the cash inflows and outflows of a company and is used to determine whether a company is accurately managing its cash from operations, financing and investing. If you want a guide to financial statements, visit Helping Journalists Find the Narrative Behind the Numbers and download this whitepaper, A Journalist’s Guide to Financial Statements It covers an overview of the three main financial statements, key metrics found in each of these statements, and a few easy-to-follow examples of how to calculate these key metrics.What you'll find in the whitepaper:From looking at financial statements you can determine the following:Quick ratio is an indicator of a company’s short-term liquidity. A higher quick ratio indicates stronger liquidity. Quick Ratio = (Cash + Accounts Receivable) / Current LiabilitiesCurrent ratio is a liquidity ratio that measures a company’s ability to pay for its short-term obligations. A higher current ratio indicates stronger liquidity. Current Ratio = Current Assets/ Current LiabilitiesWorking capital is the capital of a business that is used in its day-to-day operations. It is a dollar amount that indicates whether a company’s liquid assets can cover its liabilities. Negative working capital can technically be a definition of bankruptcy. Working Capital = Current Assets – Current LiabilitiesLet me know if this helps!
How can I get the financial statements of Private company of India?
Financial Statements include Profit and Loss and Balance Sheet and they are public documents which can downloaded from ROC website Ministry Of Corporate Affairs by paying nominal feesPrivate Limited companies enjoy some privilege over public company , one of the privilege is Profit and loss account is not a public document.For Private Limited company only Balance Sheet can be downloaded ( Profit and loss account cannot be accessed since the same is not a public document in IndiaHence you can only get copy of Balance Sheet for Private Limited Companies.
How do you read the balance sheet of a company?
Let me explain with some analogy which will work best in this case. Suppose you bought a Home worth ‘x’. Suppose you borrowed 80% of the amount from the Bank and made an investment of 20% from your side.So, we can write it asValue of Home = Amount Borrowed + Self-Investment. Fair enough?i.e. x = 0.8*x + 0.2*xNow, you own the home, but do you own it completely? No.Does bank have some claim over your home? Yes.Until you repay your loans completely, bank will have claim over your home.Now, connecting it with Balance SheetValue of Home = x = Asset…Amount Borrowed = 0.8*x = Liabilities…Self-Investment = 0.2*x = Equity…So,Assets = Liabilities + EquityGot the connection? This is the main equation of balance sheet. It’s quite intuitive, isn’t it?Now, we will focus on a company, and why is it said that the more the debt the more is the risk?Suppose, after 5 years your Home’s market value becomes ‘2*x’ (doubled)Also consider your loan at 10% interest rate (deferred – to be payable after five years)So, the value of loan becomes ‘1.29*x’Now using the same equation2*x = 1.29*x + plug figureThis comes to be 0.71*x.So, after 5 years your investment becomes (0.71)/(0.2) times i.e. 3.5 times. Although your asset growth was only 2 times your equity grew by 3.5 times, this is because you leveraged and thus took risk. Risk and return goes hand in hand.What could be the downside?If suppose in 5 years your Home’s market value remains the same i.e. xAnd loan value becomes 1.29*xSo, using the same equationx = 1.29*x + plug figureSo, here the value of the plug figure becomes -0.29*x. Here you can see that the company’s equity became negative. The owner lost his 20% claim on the house and is no longer considered to be the owner. The company has a threat to go into bankruptcy from here as they will not be able to cover the interest costs even by selling the Assets (home in our case). Risk and return goes hand in hand.
Financial Accounting problems?
Nelson's Inc.'s comparative balance sheet at January 31, 2011 and 2010, reports (in millions) 2011 2010 Total Assets $39 $31 Total Liabilities $10 $9 Threes situations about Nelson's issuance of stock and payment of dividends during the year ended January 31, 2011. For each situation, use the accounting equation and the statement of retained earnings to compute the amount of Nelson's net income or net loss during the year ended January 31, 2011 1. Nelson issued $11 million of stock and pays no dividend 2. Nelson issued no stock but paid dividends of $11 million 3. Nelson issued $55 million of stock and paid dividends of $32 i know the equation is Asset = Liabilities + Owner's Equity Asset = Liabilities + Paid-in Capital (common stock) + Retain Earnings I just dont know what i should do with the numbers they give me for each situation Please help me! I have been trying to solve this problem for hours and im totally confused and lost now. You dont have to give me the answer, just tell me what i should do or clarify the requirement for me. Thank you very very much.
Which the best place to learn Financial Modelling?
I was given a big project on Financial Modelling in II semester,3rd year (2015) in my college Bits Pilani (MSc Tech Finance), I did know how to use excel properly but completed the project anyhow with the help of friends. I needed to master my financial modelling skills for my placements and as well as for my 6 months Internship at JP Morgan.I contacted Mr. Keshav Kumar CFA (Founding Director and lead trainer of Financial Corridor) and he provided an assurance to make me an expert in financial modelling with the help of their financial modelling course of 2 months duration, The course really taught me how to transform all my fundamental finance knowledge into excel starting fromDownloading the historical data and finding the relevant measures like beta, variance, covariance and standard deviation in excel.Pulling the information, vision of the company from the annual reports and according to that projecting a suitable rate of growth for all the components of balance sheet and P&L statement and then projecting it for the next 5 years using compound annual growth model (CAGR)Calculating and comparing different liquidity, market, profitability, capital structure ratios of the company with industry.Making a portfolio using 4 different stocks and deciding their weights on the basis of risk and correlation between them.Drawing Markowitz model for every weight and risk combination in excel.Mr. Keshav helped me to make a substantial live project as well in those 2 months using financial modelling on company Infosys. It included a rigorous analysis of the company using past data, last 5 years annual reports, projection of balance sheets and Income statements using CAGR for next 5 years, ratio analysis and comparison of ratios with the industry. This project still comes very handy to me for showcasing it in interviews even after 2 years of industry experience.As per my personal experience, Financial Corridor (Pitampura) is the best institute in Delhi to become an expert in excel as well as Financial Modelling. I would suggest you to visit the institute once, take a demo class and then feel the difference yourself.