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Chapter_17_assignment_Sept 20

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Question;Assignment 1.;The McConnell Department Stores, Inc. chief;executive officer (CEO) has asked you to compare the company?s profit;performance and financial position with the averages for the industry. The CEO;has given you the company?s income statement and balance sheet, as well as the;industry average data for retailers.;MCCONNEL;DEPARTMENT STORES, INC.;Income Statement Compared;with Industry Average;Year Ended December 31, 2014;McConnell Industry Average;Net;Sales $777,000 100.0%;Cost;of Goods Sold _522,816___ 65.8;Gross;Profit;255,184 34.2;Operating;Expenses _161,046 19.7;Operating;Income 94,138 14.5;Other;Expenses _____4,668 0.4;Net;Income $ 89,470 14.1 %;MCCONNELL;DEPARTMENT STORES, INC.;Balance Sheet Compared with;Industry Average;December 31, 20144;McConnell Industry Average;Current Assets $ 325,440 70.9%;Fixed Assets, Net 120,960 23.6;Intangible Assets;Net 8,640 0.8;Other Assets _ 24,960 4.7 _ Total Assets _$;480,000 _ 14.1%;Current;Liabilities $ 222,720 48.1%;Long-term;Liabilities _ 107,520;16.6;Total Liabilities;330,240 64.7;Stockholders? Equity _ 149,760 35.3;Total;Liabilities and;Stockholders?;Equity $ 480,000;100.0%;Assignment: Prepare a vertical analysis for McConnell for;both its income statement and balance sheet.;Assignment 2. Comparative financial statement data of;Danfield, Inc. follow;DANFIELD;INC.;Comparative Income Statement;Years Ended December 31, 2015;and 2014;2015 2014;Net;Sales $ 467,000 $ 428,000;Cost;of Goods Sold 237,000;218,000;Gross;Profit 230,000 210,000;Operating;Expenses 136,000;134,000;Income;From Operations 94,000;76,000;Interest;Expense 9,000 10,000;Income;Before Income Tax 85,000 66,000;Income;Tax Expense 24,000 27,000;Net Income $;61,000;$ 39,000;DANFIELD;INC.;Comparative;Balance Sheet;December;31, 2015 and 2014;2015 2014 2013*;ASSETS;Current Assets;Cash $ 97,000;$ 95,000;Accounts;Receivable 112,000 118,000 $ 102,000;Merchandise;Inventory 145,000 163,000 203,000;Prepaid;Expenses 12,000 5,000;Total Current Assets $ 577,000 $;560,000 598,000;Liabilities;Total Current Liabilities $ 225,000 $ 246,000;Long-term Liabilities 114,000 97,000;Total Liabilities 339,000;343,000;Stockholders? Equity;Preferred Stock, 3% 108,000 108,000;Common Stockholders? Equity, no par 130,000 109,000 85,000;Total Liabilities and;Stockholders? Equity $;577,000;$ 560,000;1.;Market price of Danfield?s common stock: $86.58 at;December 31, 2015, and $46.54 at December 31, 2014.;2.;Common shares outstanding: 12,000 during 2015 and;10,000 during 2014 and 2013.;3.;All sales are on credit.;Assignment;A Compute the following ratios for 2015 and;2014;1.;Current Ratio;6. Debt to equity ratio;2.;Cash Ratio 7. Rate of return common;stockholders? equity;3.;Times-interest-earned ratio 8. Earnings per share;of common stock;4.;Inventory turnover 9.;Price/earnings ratio;5.;Gross Profit percentage;B.;Decide (a) whether Danfield?s ability to pay debts and to sell inventory;improved or deteriorated during 2015 and (b) whether the investment;attractiveness of its common stock appears to have increased or decreased.

 

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