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ACC P14-3 ? Clarence Corporation




Question;P14-3 ? Perform ratio analysis and evalute financial position and operating resultsManagerial Accounting, 6th Edition, by Weygandt, Kieso, and KimmelPrimer on Using Microsoft Excel in Accounting by Rex A SchildhouseProblem P14-3 Condensed balance sheet and income statement data for Clarence Corporation appear below:CLARENCE CORPORATIONBalance SheetsDecember 3120142013Cash$25,000$20,000Receivables (net)50,00045,000Other current assets90,00095,000Investments75,00070,000Plant and equipment (net)400,000370,000$640,000$600,000Current liabilities70,00075,000Long-term debt80,00085,000Common stock, $10 par345,000315,000Retained earnings145,000125,000$640,000$600,0002012$18,00048,00064,00045,000358,000$533,00070,00050,000300,000113,000$533,000CLARENCE CORPORATIONIncome StatementFor the Year Ended December 312014$740,00040,000700,000420,000280,000238,000$42,000Sales revenueLess: Sales returns and allowancesNet salesCost of goods soldGross profitOperating expenses (including income taxes)Net incomeAdditional information:1. The market price of Clarence's common stock wasfor 2012, 2013, and 2014, respectively.2. All dividends were paid in cash.Instructions:(a) Compute the following ratios for 2013 and 2014.(a) (1) Profit margin.20132014(a) (2) Asset turnover.20132014$4.002013$700,00060,000640,000400,000240,000208,000$32,000$5.00and$8.00===times=times(a) (3) Earnings per share. (Weighted average common shares in 2014 were31,000201332,000and in 2013 were=2014(a) (4) Price-earnings.20132014(a) (5) Payout.20132014(a) (6) Debt to total assets.20132014==times=times====(b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2013to 2014 of Clarence Corporation.


Paper#40668 | Written in 18-Jul-2015

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