12. Financial Evaluation

| June 4, 2016

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Construction Finance, Accounting, and Risk

12. Financial Evaluation
Homework – Balance Sheet
Shift Commercial Construction Balance Sheet
Adapted from Peterson, Stephen. (2009) Construction Accounting and Financial Management. Pearson.
Current Year

Last Year

ASSETS
CURRENT ASSETS
Cash
Accounts Receivable – Trade
Accounts Receivable – Retention
Inventory
Costs and Profits in Excess of Billings
Notes Receivable
Prepaid Expenses
Other Current Assets
TOTAL CURRENT ASSETS

$35,465.00
$75,756.00
$7,216.00
$$9,236.00
$3,562.00
$546.00
$3,114.00
$134,895.00

$38,546.00
$42,323.00
$5,210.00
$$7,598.00
$$1,061.00
$1,256.00
$95,994.00

FIXED AND OTHER ASSETS
Construction Equipment
Trucks and Autos
Office Equipment
TOTAL FIXED ASSETS
LESS DEPRECIATION
NET FIXED ASSETS
Other Assets
TOTAL ASSETS

$41,189.00
$12,035.00
$9,356.00
$62,580.00
$50,064.00
$12,516.00
$50,953.00
$198,364.00

$41,189.00
$12,035.00
$9,356.00
$62,580.00
$43,806.00
$18,774.00
$65,230.00
$179,998.00

LIABILITIES
Current Liabilities
Accounts Payable -Trade
Accounts Payable – Retention
Billings in excess of Costs and Profits
Notes Payable
Accrued Payables
Accrued Taxes
Accrued Vacation
Other Current Liabilities
TOTAL CURRENT LIABILITIES
Long Term Liabilities
TOTAL LIABILITIES

$42,650.00
$3,589.00
$2,209.00
$5,462.00
$3,562.00
$789.00
$7,598.00
$4,230.00
$70,089.00
$62,215.00
$132,304.00

$37,980.00
$4,596.00
$1,068.00
$7,512.00
$3,489.00
$956.00
$7,985.00
$5,356.00
$68,942.00
$64,048.00
$132,990.00

OWNER’S EQUITY
Capital Stock
Retained Earnings
Current Period Net Income
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY

$12,500.00
$53,560.00
$$66,060.00
$198,364.00

$12,500.00
$34,508.00
$$47,008.00
$179,998.00

Construction Finance, Accounting, and Risk
12. Financial Evaluation
Homework – Income Statement
Shift Commercial Construction Balance Sheet
Adapted from Peterson, Stephen. (2009) Construction Accounting and Financial Management. Pearson.
REVENUES

$956,983.00

CONSTRUCTION COSTS
Materials
Labor
Subcontract
Equipment
Other
TOTAL CONSTRUCTION COSTS

$102,356.00
$256,350.00
$456,320.00
$25,646.00
$1,935.00
$842,607.00

EQUIPMENT COSTS
Rent and Lease Payments
Depreciation
Repairs and Maintenance
Fuel and Lubrication
Taxes, Licenses, Insurance
Equipment Costs Charged to Job
TOTAL EQUIPMENT COSTS
GROSS PROFIT

$4,593.00
$7,255.00
$4,236.00
$9,136.00
$426.00
$25,646.00
$$114,376.00

OVERHEAD

$82,365.00

NET PROFIT FROM OPERATIONS

$32,011.00

OTHER INCOME AND EXPENSE
PROFIT BEFORE TAXES
INCOME TAX
PROFIT AFTER TAXES

$1,875.00
$33,886.00
$5,263.00
$28,623.00

Construction Finance, Accounting, and Risk
12.0 Financial Evaluation Homework

12. Financial Evaluation
Homework – Questions

1. From the Shift Construction Balance Sheet and Income Statement, determine the following financial information:
Quick Ratio
Current Ratio
Current Liabilities to Net Worth
Debt to Equity
Fixed Assets to Net Worth
Current Assets to Total Assets
Collection Period (w/ retention)
Collection Period (w/o retention)
Receivable Turns
Average Age of Accounts Payable**
Payable Turns
Assets to Revenues
Working Capital Turns
Accounts Payable to Revenues
Gross Profit Margin
General Overhead
Pre-Tax Margins
After-Tax Margins
Return on Assets
Pre-Tax Return on Equity
After-Tax Return on Equity
Degree of Fixed Asset Newness
**NOTE: Use only material and subcontract costs to calculate
average of accounts payable
2. What insight can you gain from this company? Are there any trouble signs?

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