Briefly discuss Fibertech’s financial statements. (Please comment on its financial position, profitability, liquidity and whatever relevant information you can interpret from the financial statements.
Fibertech GmbH Balance sheets at 31 December x3 and x4 (amounts in €000) Dec 31, x3 Dec 31, x4 Non-current assets Brands 50 90 Land 200 200 Building and equipment, gross 540 580 less: Accumulated depreciation (484) (474) Building and equipment, net 56 106 Total non-current assets 306 396 Current assets Inventories 250 350 Accounts receivable 400 500 Prepaid insurance 4 6 Cash 340 239 Total current assets 994 1.095 Total assets 1.300 1.491 Shareholders' equity Share capital 170 170 Retained profits 120 426 Total shareholders' equity 290 596 Non-current liabilities Long-term bank loan 600 450 Current liabilities Short-term portion of long-term bank loan 150 150 Accounts payable 200 250 Taxes payable 35 25 Interest payable 25 20 Total current liabilities 410 445 Total liabilities and shareholders’ equity 1.300 1.491 Fibertech GmbH is a distributor of outdoors technical clothing. The company outsources the production of clothing to external manufacturers in Bangladesh and sells the clothing under its own brands. Below you are provided with the balance sheet at the end of x3 and x4, and the profit & loss and cash T- accounts for x4. Note that some numbers are missing in the T-accounts. You'll have to infer them in the questions below. ACCOUNTING: MAKING SOUND DECISIONS QUIZ 4 Page 1 Debit Credit - BB Cost of goods sold 1.400 2.200 Total sales Depreciation expense 40 15 Gain on sale of buildings and equipment Selling and administration salaries 240 Insurance expense ? Interest expense ? Income taxes ? 336 Net Income Debit Credit BB 340 Receipts from customers 2.100 ? Payments to suppliers Proceeds from sale of 45 120 Purchase of equipment buildings and equipment 240 Payments of salaries 36 Prepayments of insurance 60 Payments of interest on loans 150 Loan repayment 120 Payments of taxes ? Payments of dividends 40 Purchase of brand EB 239 Additional note:Fibertech estimates its brands have an indefinite life and consequently they are not amortized. Cash Profit and loss year x4 Page 2
