Documentation For Benjamin's Machinery Inc. ✓ Solved
Documentation Benjamin's Machinery Inc. Author Date Purpose T
To display Last Year's and This Year's balance sheet comparisons for Benjamin's Machinery Inc.
Balance Sheet for Benjamin's Machinery Inc.
The balance sheet is a financial statement that summarizes the company's assets, liabilities, and shareholders' equity at a specific point in time. Below is the comparative balance sheet for Benjamin's Machinery Inc. for the last year and the current year, along with the percentage change in each account.
Balance Sheet
| Account | LAST YEAR | THIS YEAR | % Change |
|---|---|---|---|
| Assets | |||
| Cash | $50,000 | $60,000 | 20% |
| Accounts Receivable | $30,000 | $25,000 | -16.67% |
| Inventories | $20,000 | $30,000 | 50% |
| Prepaid Expenses | $5,000 | $3,000 | -40% |
| Current Assets | $105,000 | $118,000 | 12.38% |
| Other Assets | $10,000 | $12,000 | 20% |
| Fixed Assets (at cost) | $100,000 | $120,000 | 20% |
| Accumulated Depreciation | ($30,000) | ($40,000) | 33.33% |
| Net Fixed Assets | $70,000 | $80,000 | 14.29% |
| TOTAL ASSETS | $175,000 | $210,000 | 20% |
| Liabilities | |||
| Accounts Payable | $25,000 | $20,000 | -20% |
| Accrued Expenses | $10,000 | $8,000 | -20% |
| Current Portion of Debt | $15,000 | $12,000 | -20% |
| Income Taxes Payable | $5,000 | $6,000 | 20% |
| Current Liabilities | $55,000 | $46,000 | -16.36% |
| Long-Term Debt | $40,000 | $50,000 | 25% |
| Capital Stock | $60,000 | $70,000 | 16.67% |
| Retained Earnings | $20,000 | $24,000 | 20% |
| Shareholders' Equity | $80,000 | $94,000 | 17.5% |
| TOTAL LIABILITIES & EQUITY | $175,000 | $210,000 | 20% |
Analysis of the Balance Sheet
The balance sheet for Benjamin's Machinery Inc. illustrates the company's financial position during the two reporting periods. A detailed analysis reveals several significant changes reflecting its operational performance and economic environment.
Asset Adjustments
The total assets of Benjamin's Machinery Inc. increased by 20%, from $175,000 last year to $210,000 this year. Notably, cash on hand grew by 20%, indicating stronger liquidity. However, accounts receivable decreased, reflecting improved cash collection processes or potentially a reduction in sales.
Inventory levels rose significantly by 50%, which could suggest increased production or stockpiling in anticipation of higher demand. The rise in fixed assets is also notable, suggesting investments in new machinery or facilities that position the company for future growth.
Liability Management
During the same period, the company succeeded in reducing its current liabilities by approximately 16.36%, indicating improved management of short-term obligations. Notably, accounts payable and accrued expenses also dropped, suggesting efficient payment cycles and expense management strategies.
Conversely, long-term debt increased by 25%, highlighting a strategic decision to finance growth through debt rather than equity, which can magnify returns in a growth-oriented environment.
Shareholders' Equity Growth
The increase in shareholders' equity by 17.5% strengthens the company’s capital base, enhancing its ability to weather economic fluctuations and invest further in business opportunities. The increase in retained earnings is a good indicator of profitability and reinvestment into the company.
Conclusion
In summary, Benjamin's Machinery Inc. has demonstrated a solid financial performance characterized by increased assets and a deliberate approach to managing liabilities. The strategic decisions reflected in the balance sheet will support continued growth and profitability, offering a favorable outlook for stakeholders and potential investors.
References
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