Pizzacash In Bank Revenue Large Pieces ✓ Solved

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The provided data outlines the financial overview for ECC Pizza, detailing revenues, cost of goods sold (COGS), and other relevant financial metrics across various categories including large and medium pies, expenses, and cash flow activities. This document will outline the preparation of financial statements including the income statement, cash flow and profit/loss analysis based on the data provided.

Understanding Financial Statements

Financial statements are essential for assessing the performance and financial position of a business. The key components usually include the income statement, cash flow statement, and balance sheet. For ECC Pizza, we will analyze both income statements and cash flows based on the available data.

Income Statement Construction

The income statement of ECC Pizza summarizes its revenues and expenses during a particular period, providing insights into profitability. The following elements are extracted from the provided data:

• Revenue:
  • Large Pie Revenue: $9,075,890.00
  • Medium Pie Revenue: $240.00
  • Total Revenue: $9,315,658.00
• Cost of Goods Sold (COGS):
  • Large Pie COGS: $4,840,840.00
  • Medium Pie COGS: $140.00
  • Total COGS: $4,980,280.00
• Gross Profit:

  Gross Profit = Total Revenue - Total COGS

  $9,315,658.00 - $4,980,280.00 = $4,335,378.00

• Other Expenses:
  • Rent: $800,600.00
  • Payroll: $3,000,000.00
  • Utilities: $300.00
  • Marketing: $150.00
  • Driver Expenses: $150.00
  • Total Other Expenses: $4,400,250.00
• Net Profit (Loss):

  Net Profit = Gross Profit - Total Other Expenses

  $4,335,378.00 - $4,400,250.00 = $(64,872.00)

Cash Flows Overview

The cash flow statement shows the inflows and outflows of cash throughout the period. It is critical to determining liquidity. From the provided data, the cash flow activity for the specified months is detailed as follows:

Cash Inflows

• Owner Investment: $25.00
• Outside Investment: $100,000.00
• Revenue: $7,300.00
• Total Cash In: $107,325.00

Cash Outflows

• Oven: $2,000.00
• Boxes: $500.00
• Utensils: $1,800.00
• Fridge: $2,000.00
• Rent: $3,500.00
• Leasehold Improvements: $5,000.00
• Furniture: $2,000.00
• Cash Register: $500.00
• Computer: $500.00
• Payroll: $4,000.00
• Total Cash Out: $22,000.00

Ending Balance Calculation

The ending cash balance is essential for understanding the liquidity position of ECC Pizza:

Ending Balance = Beginning Balance + Total Cash In - Total Cash Out

$0 + $107,325.00 - $22,000.00 = $85,325.00

Conclusion

The financial analysis of ECC Pizza reflects a gross profit, but it also reveals a net loss, indicating that expenses exceed the gross profit generated from sales. Moreover, the cash flow statement indicates a positive cash flow situation when considering inflows versus outflows. Therefore, despite being profitable overall in gross terms, ECC Pizza needs to look into reducing its operating expenses to move toward a net profit position.

References

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