Airline Company Balance Sheet
As of December 31, 2003
Assets
Cash………………………………………………….. $ 30,000
Account receivable………………………………… 50,000
Inventory…………………………………………….. 80,000
Net plant and equipment…………………………. 200,000
Total Assets………………………………………$ 360,000

Liabilities and Stockholders’ Equity
Accounts Payable………………………………… $ 50,000
Accrued expenses………………………………… 30,000
Long-term debt…………………………………….. 120,000
Common stock……………………………………… 60,000
Paid-in capital……………………………………….. 20,000
Retained earning……………………………………. 80,000
Total liabilities and Stockholders’ Equity…. $360,000

Airline Company Income Statement
For Year Ended December 31, 2003

Sales (on credit)……………………………………… $ 720,000
Cost of goods sold…………………………………… 500,000
Gross profit…………………………………………….$ 220,000
Sales and administration expense………………… 20,000
Depreciation…………………………………………… 40,000
Operating profit……………………………………….. $ 160,000
Interest expense………………………………………. 16,000
Profit before tax………………………………………. 144,000
Taxes (50 percent)…………………………………… 72,000
Net income…………………………………………….. $ 72,000


4. The firm’s average collection period is?

5. Airline Company’s current ratio?

6. Times interest earned for the company is?

7. The firm’s debt to asset ratio is?

8. Compute Airline Company’s after tax profit margin?

9. The firm’s receivable turnover is?

What is a trail balance sheet

Goodwil

Goodwill is an intangible asset and you can only acquire it when you purchase a company.