Ribbons and bows
Answers
1. I would report that the company was profitable but only because Carmen did not pay herself $1,300 per month or pay back any of the $10,000 short term loan. The assets in the company increased by $1,768 meaning that the company generated a Profit. The investment of Cash into machinery (Computer and sowing machine) caused the negative bank balance, if these assets were sold and put back into the company the bottom line would be better. It is hard to tell whether things are getting better or worse as there is not a lot of info as to sales per month ... There is also the issue of the $10,000 loan which will come due in 8 months.
2. I would say that the current ratio is ok I am not sure what the market average is on this but anything above one is normally considered good... so for a start up it seems that this number is good. The Debt to Equity Ratio is a little scary considering that the sort term loan is due in 8 months and it took 4 months to make $1,678, if you carry this forward you can see that Carmen will have a hard time paying this back with the current sales figures, it is hard to tell if the sales are increasing month by month due to the lack of monthly sales figures.
3. No, due to the fact that Carmen did not pay herself, how long would she continue working for free? there is mention of the fact that she made $1,300 per month pre starting her business this means that there is an expectation that she will pay herself or take dividends. If Carmen paid herself $1,300 and made payments on the loan of ~$840 per month, she would be loosing money and the figures would be very different
1. I would report that the company was profitable but only because Carmen did not pay herself $1,300 per month or pay back any of the $10,000 short term loan. The assets in the company increased by $1,768 meaning that the company generated a Profit. The investment of Cash into machinery (Computer and sowing machine) caused the negative bank balance, if these assets were sold and put back into the company the bottom line would be better. It is hard to tell whether things are getting better or worse as there is not a lot of info as to sales per month ... There is also the issue of the $10,000 loan which will come due in 8 months.
2. I would say that the current ratio is ok I am not sure what the market average is on this but anything above one is normally considered good... so for a start up it seems that this number is good. The Debt to Equity Ratio is a little scary considering that the sort term loan is due in 8 months and it took 4 months to make $1,678, if you carry this forward you can see that Carmen will have a hard time paying this back with the current sales figures, it is hard to tell if the sales are increasing month by month due to the lack of monthly sales figures.
3. No, due to the fact that Carmen did not pay herself, how long would she continue working for free? there is mention of the fact that she made $1,300 per month pre starting her business this means that there is an expectation that she will pay herself or take dividends. If Carmen paid herself $1,300 and made payments on the loan of ~$840 per month, she would be loosing money and the figures would be very different