Below Are the Income Statements and Balance Sheets for Cookshire

question 7

Essay

Below are the income statements and balance sheets for Cookshire Cookware Corp.(CCC) for 2012 and 2013. Cookshire Cookware Corp.
Income Statement
For the years ended June 30
(in thousands)
$\begin{array}{lrr}&2013&2012\\\text { Revenue } & \$ 5,200 & \$ 4,400 \\\text { Cost of goods sold } & 2,850 & 2,500 \\\text { Operating expenses } & 1,120 & 970 \\\text { Amortization expense } & 300 & 250 \\\text { Interest expense } & 100 & 120 \\\text { Tax expense } & \underline{290} & \underline{200} \\\text { Net income } & \$ 540 & \$ 360\end{array}$ Cookshire Cookware Corp.
Balance Sheet
For the years ended June 30
(in thousands)
$\begin{array}{lrr}&2013&2012\\\text { Assets: } & \$ 10 & 18 \\\text { Cash } & 520 & 440 \\\text { Accounts Receivable } & 560 & 500 \\\text { Inventory } & 100 & 100\\\text { Property, Plant and Equipment } & & \\\text { (net of accumulated amortization) } & 1,800 & 1,700 \\\text { Other non-current assets } & 150 & 150\\\text { Total Assets: }&\$3,140&\$2,908\end{array}$ $\begin{array}{lrr}\text { Liabilities: } & & \\\text { Bank loan } & 100 & 150 \\\text { Accounts payable } & 480 & 370 \\\text { Other current liabilities } & 70 & 80 \\\text { Long-term debt } & 970 & 1,200\\&1,620&1,800\\\text { Shareholders' Equity: }\\\text { Capital Stock } & 500 & 500 \\\text { Retained Earnings } & 1,020 & 608\\&1,520&1,308\\\text { Total Liabilities and Shareholders' Equity }&\$3,140&\$2,908\end{array}$ Required:
A) Calculate the following ratios for Cookshire Cookware Corp for 2012 and 2013:
i) current ratio
ii) debt-to-equity ratio
iii) gross margin percentage
B) Explain any changes in the ratios from year to year.
C) If you were a potential investor, how would the changes from 2012 to 2013 affect your decision to buy
shares in CCC?

• A) Calculate the following ratios for Cookshire Cookware Corp for 2012 and 2013:
• i) current ratio
• ii) debt-to-equity ratio
• iii) gross margin percentage
• B) Explain any changes in the ratios from year to year.
• C) If you were a potential investor, how would the changes from 2012 to 2013 affect your decision to buy
• shares in CCC?

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Definitions:

MRP Curve

A graphical representation showing the additional revenue a firm generates by hiring one more unit of labor, based on the concept of marginal revenue product.

Marginal Physical Product

The change in output that results from employing an additional unit of a particular input, holding all other inputs constant.

MRP Schedule

A schedule showing the marginal revenue product of an input, representing the additional revenue generated from the use of one more unit of that input.

Autoworkers

Workers employed in the automotive industry, typically involved in the design, development, manufacturing, marketing, and selling of motor vehicles.