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Acc 205 week 5 exercise assignment

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Question;Week Five Exercise;Assignment;Financial Ratios;1. Liquidity ratios.Edison, Stagg, and Thornton have the following financial;information at the close of business on July 10;Edison;Stagg;Thornton;Cash;$6,000;$5,000;$4,000;Short-term investments;3,000;2,500;2,000;Accounts receivable;2,000;2,500;3,000;Inventory;1,000;2,500;4,000;Prepaid expenses;800;800;800;Accounts payable;200;200;200;Notes payable: short-term;3,100;3,100;3,100;Accrued payables;300;300;300;Long-term liabilities;3,800;3,800;3,800;Compute the;current and quick ratios for each of the three companies. (Round;calculations to two decimal places.) Which firm is the most liquid? Why?;2. Computation and evaluation of;activity ratios.The following data relate to Alaska Products, Inc;20X5;20X4;Net credit sales;$832,000;$760,000;Cost of goods sold;530,000;400,000;Cash, Dec. 31;125,000;110,000;Average Accounts receivable;205,000;156,000;Average Inventory;70,000;50,000;Accounts payable, Dec. 31;115,000;108,000;Instructions;a. Compute the accounts;receivable and inventory turnover ratios for 20X5. Alaska rounds all;calculations to two decimal places.;3. Profitability;ratios, trading on the equity.Digital Relay has;both preferred and common stock outstanding. The com?pany reported the;following information for 20X7;Net sales;$1,750,000;Interest expense;120,000;Income tax;expense;80,000;Preferred;dividends;25,000;Net income;130,000;Average assets;1,200,000;Average common stockholders;equity;500,000;Compute the;profit margin on sales ratio, the return on equity and the return on assets;rounding calculations to two decimal places.;Does the;firm have positive or negative financial leverage? Briefly ex?plain.;4.;Horizontal;analysis. Mary Lynn Corporation has been operating for several years.;Selected data from the 20X1 and 20X2 financial statements follow.;20X2;20X1;Current Assets;$86,000;$80,000;Property, Plant, and;Equipment (net);99,000;90,000;Intangibles;25,000;50,000;Current Liabilities;40,800;48,000;Long-Term;Liabilities;153,000;160,000;Stockholders? Equity;16,200;12,000;Net Sales;500,000;500,000;Cost of Goods Sold;322,500;350,000;Operating Expenses;93,500;85,000;a. Prepare a horizontal;analysis for 20X1 and 20X2. Briefly comment on the results of your work.;5.Vertical analysis. Mary Lynn;Corporation has been operating for several years. Selected data from the 20X1;and 20X2 financial statements follow.;20X2;20X1;Current Assets;$86,000;$80,000;Property, Plant, and Equipment (net);99,000;80,000;Intangibles;25,000;50,000;Current Liabilities;40,800;48,000;Long-Term Liabilities;153,000;150,000;Stockholders? Equity;16,200;12,000;Net Sales;500,000;500,000;Cost of Goods Sold;322,500;350,000;Operating Expenses;93,500;85,000;a. Prepare a vertical analysis for;20X1 and 20X2. Briefly comment on the results of your work.;6. Ratio;computation.The;financial statements of the Lone Pine Company follow.;LONE PINE COMPANY;Comparative Balance;Sheets;December 31, 20X2;and 20X1 ($000 Omitted);20X2;20X1;Assets;Current Assets;Cash and Short-Term;Investments;$400;$600;Accounts Receivable (net);3,000;2,400;Inventories;3,000;2,300;Total Current Assets;$6,400;$5,300;Property, Plant, and;Equipment;Land;$1,700;$500;Buildings and Equipment (net);1,500;1,000;Total Property, Plant, and;Equipment;$3,200;$1,500;Total Assets;$9,600;$6,800;Liabilities and;Stockholders? Equity;Current Liabilities;Accounts Payable;$2,800;$1,700;Notes Payable;1,100;1,900;Total Current Liabilities;$3,900;$3,600;Long-Term;Liabilities;Bonds Payable;4,100;2,100;Total Liabilities;$8,000;$5,700;Stockholders? Equity;Common Stock;$200;$200;Retained Earnings;1,400;900;Total Stockholders? Equity;$1,600;$1,100;Total Liabilities and Stockholders? Equity;$9,600;$6,800;LONE PINE COMPANY;Statement of Income;and Retained Earnings;For the Year Ending;December 31,20X2 ($000 Omitted);Net Sales*;$36,000;Less: Cost of Goods Sold;$20,000;Selling Expense;6,000;Administrative;Expense;4,000;Interest Expense;400;Income Tax Expense;2,000;32,400;Net Income;$3,600;Retained Earnings;Jan. 1;900;Ending Retained;Earnings;$4,500;Cash Dividends;Declared and Paid;3,100;Retained Earnings;Dec. 31;$1,400;*All sales are on;account.;Instructions;Compute the;following items for Lone Pine Company for 20X2, rounding all calcu?lations to;two decimal places when necessary;a. Quick ratio;b. Current ratio;c.;Inventory-turnover ratio;d.;Accounts-receivable-turnover ratio;e.;Return-on-assets ratio;f.;Net-profit-margin ratio;g.;Return-on-common-stockholders? equity;h. Debt-to-total;assets;i. Number of;times that interest is earned

 

Paper#37450 | Written in 18-Jul-2015

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