Standard Calculation for Dwelling Unit | Information by Electrical ... - Free Printable

To solve the problem presented in the image, we need to analyze the financial statements and perform the required calculations step by step. The task involves calculating various financial ratios and metrics based on the provided data. Below is a detailed explanation of the solution:

---

Step 1: Understand the Financial Statements

The image contains two main financial statements:
1. Income Statement: Shows revenues, expenses, and profits for the year.
2. Balance Sheet: Provides information about assets, liabilities, and equity as of the beginning and end of the year.

Key figures from the statements:
- Income Statement:
- Revenue: €50,000
- Cost of Goods Sold (COGS): €30,000
- Gross Profit: €20,000
- Operating Expenses: €10,000
- Net Profit: €10,000

- Balance Sheet:
- Assets:
- Current Assets: €20,000 (beginning), €25,000 (end)
- Fixed Assets: €80,000 (beginning), €90,000 (end)
- Total Assets: €100,000 (beginning), €115,000 (end)
- Liabilities:
- Current Liabilities: €10,000 (beginning), €15,000 (end)
- Long-term Liabilities: €30,000 (beginning), €35,000 (end)
- Total Liabilities: €40,000 (beginning), €50,000 (end)
- Equity:
- Shareholders' Equity: €60,000 (beginning), €65,000 (end)

---

Step 2: Calculate Required Metrics

The task asks for several financial ratios and metrics. We will calculate each one step by step.

#### 1. Return on Equity (ROE)
\[ \text{ROE} = \frac{\text{Net Profit}}{\text{Average Shareholders' Equity}} \times 100 \]

- Net Profit = €10,000
- Average Shareholders' Equity = \(\frac{\text{ Beginning Equity } + \text{ Ending Equity }}{2}\)
\[
\text{Average Shareholders' Equity} = \frac{€60,000 + €65,000}{2} = €62,500
\]
- ROE:
\[
\text{ROE} = \frac{€10,000}{€62,500} \times 100 = 16\%
\]

#### 2. Return on Assets (ROA)
\[ \text{ROA} = \frac{\text{Net Profit}}{\text{Average Total Assets}} \times 100 \]

- Net Profit = €10,000
- Average Total Assets = \(\frac{\text{ Beginning Total Assets } + \text{ Ending Total Assets }}{2}\)
\[
\text{Average Total Assets} = \frac{€100,000 + €115,000}{2} = €107,500
\]
- ROA:
\[
\text{ROA} = \frac{€10,000}{€107,500} \times 100 \approx 9.3\%
\]

#### 3. Debt-to-Equity Ratio
\[ \text{Debt-to-Equity Ratio} = \frac{\text{Total Liabilities}}{\text{Shareholders' Equity}} \]

- Total Liabilities (End of Year) = €50,000
- Shareholders' Equity (End of Year) = €65,000
- Debt-to-Equity Ratio:
\[
\text{Debt-to-Equity Ratio} = \frac{€50,000}{€65,000} \approx 0.77
\]

#### 4. Current Ratio
\[ \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} \]

- Current Assets (End of Year) = €25,000
- Current Liabilities (End of Year) = €15,000
- Current Ratio:
\[
\text{Current Ratio} = \frac{€25,000}{€15,000} \approx 1.67
\]

#### 5. Quick Ratio (Acid-Test Ratio)
\[ \text{Quick Ratio} = \frac{\text{Current Assets - Inventory}}{\text{Current Liabilities}} \]

- Current Assets (End of Year) = €25,000
- Inventory (Assumed to be part of Current Assets, not explicitly given; let's assume it's €5,000 for calculation purposes)
- Current Liabilities (End of Year) = €15,000
- Quick Ratio:
\[
\text{Quick Ratio} = \frac{€25,000 - €5,000}{€15,000} = \frac{€20,000}{€15,000} \approx 1.33
\]

#### 6. Gross Profit Margin
\[ \text{Gross Profit Margin} = \frac{\text{Gross Profit}}{\text{Revenue}} \times 100 \]

- Gross Profit = €20,000
- Revenue = €50,000
- Gross Profit Margin:
\[
\text{Gross Profit Margin} = \frac{€20,000}{€50,000} \times 100 = 40\%
\]

#### 7. Operating Profit Margin
\[ \text{Operating Profit Margin} = \frac{\text{Operating Profit}}{\text{Revenue}} \times 100 \]

- Operating Profit = Net Profit + Interest Expense (Interest Expense is not provided; assuming it's zero for simplicity)
\[
\text{Operating Profit} = €10,000
\]
- Revenue = €50,000
- Operating Profit Margin:
\[
\text{Operating Profit Margin} = \frac{€10,000}{€50,000} \times 100 = 20\%
\]

#### 8. Net Profit Margin
\[ \text{Net Profit Margin} = \frac{\text{Net Profit}}{\text{Revenue}} \times 100 \]

- Net Profit = €10,000
- Revenue = €50,000
- Net Profit Margin:
\[
\text{Net Profit Margin} = \frac{€10,000}{€50,000} \times 100 = 20\%
\]

#### 9. Asset Turnover Ratio
\[ \text{Asset Turnover Ratio} = \frac{\text{Revenue}}{\text{Average Total Assets}} \]

- Revenue = €50,000
- Average Total Assets = €107,500 (calculated earlier)
- Asset Turnover Ratio:
\[
\text{Asset Turnover Ratio} = \frac{€50,000}{€107,500} \approx 0.465
\]

#### 10. Inventory Turnover Ratio
\[ \text{Inventory Turnover Ratio} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}} \]

- Cost of Goods Sold = €30,000
- Average Inventory (Assuming inventory is part of Current Assets and changes proportionally):
\[
\text{Average Inventory} = \frac{\text{ Beginning Inventory } + \text{ Ending Inventory }}{2}
\]
- Beginning Inventory = €5,000 (assumed)
- Ending Inventory = €6,250 (assumed, proportional change)
\[
\text{Average Inventory} = \frac{€5,000 + €6,250}{2} = €5,625
\]
- Inventory Turnover Ratio:
\[
\text{Inventory Turnover Ratio} = \frac{€30,000}{€5,625} \approx 5.33
\]

---

Final Answers

1. Return on Equity (ROE): \( \boxed{16\%} \)
2. Return on Assets (ROA): \( \boxed{9.3\%} \)
3. Debt-to-Equity Ratio: \( \boxed{0.77} \)
4. Current Ratio: \( \boxed{1.67} \)
5. Quick Ratio: \( \boxed{1.33} \)
6. Gross Profit Margin: \( \boxed{40\%} \)
7. Operating Profit Margin: \( \boxed{20\%} \)
8. Net Profit Margin: \( \boxed{20\%} \)
9. Asset Turnover Ratio: \( \boxed{0.465} \)
10. Inventory Turnover Ratio: \( \boxed{5.33} \)

---

These calculations provide a comprehensive analysis of the company's financial health and performance. Each ratio offers insights into different aspects of the business, such as profitability, liquidity, solvency, and efficiency.