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ACCT 2000 Lecture Notes - Lecture 2: Financial Statement, Going Concern, Net Income

65 views10 pages
sangriasheep552
25 Aug 2017
School
LSU
Department
Accounting
Course
ACCT 2000
Professor
E.Briggs

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Document Summary

Chapter 2 class notes: identify the sections of a classified balance sheet, use ratios to evaluate a company"s profitability, liquidity and solvency, discuss financial reporting concepts. The classified balance sheet: reports the assets, liabilities, and equity at a. ____________________: groups together similar assets and similar liabilities, using standard classifications. Assets a company expects to convert to cash or use up within one year or an operating cycle whichever is longer. Note: current assets are listed on the balance sheet in the order when they are expected to be converted into cash (order of liquidity) Is the average time it takes from the purchase of inventory to the collection of cash. Investments in stocks/bonds of other companies that are held for more than one year. Assets with long useful lives that are currently used in the operations of a business. Process used to allocate the cost of assets to expense over a number of years.

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Related Questions

Using the financial statements for the Snider Corporation,calculate the 13 basic ratios found in the chapter.

SNIDER CORPORATION
Balance Sheet
December 31, 2013
Assets
Current assets:
Cash $ 51,800
Marketable securities 24,200
Accounts receivable (net)174,000
Inventory 227,000


Total currentassets $ 477,000
Investments 63,500

Plant and equipment. $ 646,000
Less: Accumulated depreciation246,000


Net plant and equipment 400,000


Total assets $ 940,500


Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 91,100
Notes payable 73,400
Accrued taxes 18,400


Total currentliabilities $ 182,900
Long-term liabilities:
Bonds payable 156,700


Total liabilities $ 339,600
Stockholders' equity
Preferred stock, $50 par value $100,000
Common stock, $1 par value80,000
Capital paid in excess of par190,000
Retained earnings 230,900


Total stockholders'equity $ 600,900


Total liabilities and stockholders' equity $940,500

SNIDER CORPORATION
Income Statement
For the Year Ending December 31, 2013
Sales (on credit) $ 2,034,000
Cost of goods sold 1,308,000

Gross profit $ 726,000
Selling and administrative expenses 488,000 *

Operating profit (EBIT) $ 238,000
Interest expense 34,900

Earnings before taxes (EBT) $ 203,100
Taxes 89,300

Earnings after taxes (EAT) $ 113,800

*Includes $36,600 in lease payments.

Using the above financial statements for the Snider Corporation,calculate the following ratios.

a.

Profitability ratios. (Do not round intermediate calculations.Input your answers as a percent rounded to 2 decimal places.)


Profitability Ratios
Profit margin %
Return on assets (investment) %
Return on equity %


b.

Assets utilization ratios. (Do not round intermediatecalculations. Round your answers to 2 decimal places.)


Assets Utilization Ratios
Receivable turnover times
Average collection period days
Inventory turnover times
Fixed asset turnover times
Total asset turnover times


c.

Liquidity ratios. (Do not round intermediate calculations. Roundyour answers to 2 decimal places.)


Liquidity Ratios
Current ratio times
Quick ratio times


d.

Debt utilization ratios. (Do not round intermediatecalculations. Input your debt to total assets answer as a percentrounded to 2 decimal places. Round your other answers to 2 decimalplaces.)


Debt Utilization Ratios
Debt to total assets %
Times interest earned times
Fixed charge coverage times

Oceanview MarineCompany 1-1
Balance Sheet
31-Dec-15
Assets 2015 2014 2013
Current Assts
Cash $ 1,320,096 $ 1,089,978 $ 1,200,347
AccountsReceivable: Notes 2 and 5 $ 1,646,046 $ 1,285,593 $ 1,180,982
Inventories *Notes 1a, 3, and 5 $ 13,524,349 $ 12,356,400 $ 11,461,231
PrepaidExpenses $ 17,720 $ 15,826 $ 15,275
Deposits $ 7,916 $ 5,484 $ 4,329
Total CurrentAssets $ 16,516,127 $ 14,753,281 $ 13,862,164
Property, Plant, Equipment *Notes 1b and 4
at cost, less accumulated depreciation $ 596,517 $ 612,480 $ 627,771
TOTAL ASSETS $ 17,112,644 $ 15,365,761 $ 14,489,935
LIABILITIES
CurrentLiabilites
Note Payable -Bank * Note 5 $ 5,100,000 $ 4,250,000 $ 4,000,000
Accountspayable $ 1,750,831 $ 1,403,247 $ 1,106,574
AccruedLiabilities $ 257,800 $ 217,003 $ 211,250
Federal IncomeTax Payable $ 35,284 $ 45,990 $ 39,725
Current portionof long-term debt $ 5,642 $ 5,642 $ 5,642
TotalCurrent Liabilities $ 7,149,557 $ 5,921,882 $ 5,363,191
Long-Term Liabilities
Long-TermDebt $ 409,824 $ 415,466 $ 421,108
TOTAL LIABILITIES $ 7,559,381 $ 6,337,348 $ 5,784,299
STOCKHOLDERS EQUITY
Common Stock - * Note 7 $ 10,000 $ 10,000 $ 10,000
Additional paid in capital $ 2,500,000 $ 2,500,000 $ 2,500,000
Retaind Earnings $ 7,043,263 $ 6,518,413 $ 6,195,636
Total Stockholder Equity $ 9,553,263 $ 9,028,413 $ 8,705,636
TOTAL LIABILITIES AND STOCKHOLDEREQUITY $ 17,112,644 $ 15,365,761 $ 14,489,935
Liquidity ratios: unadjusted 12/31/2015 unadjusted 12/31/2014 CHANGE Percent Change Industry Average
CurrentRation 2.31 2.49 -0.18 -7.23% 1.53
Quick Ratio 0.42 0.4 0.02 5.00% 0.43
Sales/ReceivableRatio 16.05 17.78 -1.73 -9.73% 20.29
Number of dayssales in A/R ? ? ? ? 17.99
InventoryTurnover ? ? ? ? 1.41
PROFITABILITY/PERFORMANCE RATIOS:
Gross Profit Margin (%) ? ? ? ? 39.83%
Income before taxes / owners' equity ? ? ? ? 0.06
Income before taxes / total assets 0.06 0.04 0.02 50.00% 0.04
Sales / Long - term assets 44.29 37.33 6.96 18.64% 19.07
Sales / Total Assets 1.54 1.49 0.05 3.36% 1.32
Sales / Working Capital 2.82 2.59 0.23 8.88% 2.18
SOLVENCY RATIOS
Owners Equity / Total Assets 0.56 0.59 -0.03 -5.08% 0.31
Long - Term Assets / owners' Equity 0.06 0.07 -0.01 -14.29% 0.47
Current Liabilities / Owners Equity ? ? ? ? 1.13
Total Liabilities / Owners Equity ? ? ? ? 2.03
Please answer the questionmarks and show computation


Oceanview MarineCompany Assignment 2
Balance Sheet
31-Dec-15
Assets 2015 2014 2013
Current Assts
Cash $ 1,320,096 $ 1,089,978 $ 1,200,347
AccountsReceivable: $ 1,646,046 $ 1,285,593 $ 1,180,982
Inventories $ 13,524,349 $ 12,356,400 $ 11,461,231
PrepaidExpenses $ 17,720 $ 15,826 $ 15,275
Deposits $ 7,916 $ 5,484 $ 4,329
Total CurrentAssets $ 16,516,127 $ 14,753,281 $ 13,862,164
Property, Plant, Equipment
at cost, less accumulated depreciation $ 596,517 $ 612,480 $ 627,771
TOTAL ASSETS $ 17,112,644 $ 15,365,761 $ 14,489,935
LIABILITIES
CurrentLiabilites
Note Payable -Bank $ 5,100,000 $ 4,250,000 $ 4,000,000
Accountspayable $ 1,750,831 $ 1,403,247 $ 1,106,574
AccruedLiabilities $ 257,800 $ 217,003 $ 211,250
Federal IncomeTax Payable $ 35,284 $ 45,990 $ 39,725
Current portionof long-term debt $ 5,642 $ 5,642 $ 5,642
TotalCurrent Liabilities $ 7,149,557 $ 5,921,882 $ 5,363,191
Long-Term Liabilities
Long-TermDebt $ 409,824 $ 415,466 $ 421,108
TOTAL LIABILITIES $ 7,559,381 $ 6,337,348 $ 5,784,299
STOCKHOLDERS EQUITY
Common Stock $ 10,000 $ 10,000 $ 10,000
Additional paid in capital $ 2,500,000 $ 2,500,000 $ 2,500,000
Retaind Earnings $ 7,043,263 $ 6,518,413 $ 6,195,636
Total Stockholder Equity $ 9,553,263 $ 9,028,413 $ 8,705,636
TOTAL LIABILITIES AND STOCKHOLDEREQUITY $ 17,112,644 $ 15,365,761 $ 14,489,935
Liquidity ratios: unadjusted 12/31/2015 unadjusted 12/31/2014 CHANGE Percent Change Industry Average
CurrentRation 2.31 2.49 -0.18 -7.23% 1.53
Quick Ratio 0.42 0.4 0.02 5.00% 0.43
Sales/ReceivableRatio 16.05 17.78 -1.73 -9.73% 20.29
Number of dayssales in A/R ? ? ? ? 17.99
InventoryTurnover ? ? ? ? 1.41
PROFITABILITY/PERFORMANCE RATIOS:
Gross Profit Margin (%) ? ? ? ? 39.83%
Income before taxes / owners' equity ? ? ? ? 0.06
Income before taxes / total assets 0.06 0.04 0.02 50.00% 0.04
Sales / Long - term assets 44.29 37.33 6.96 18.64% 19.07
Sales / Total Assets 1.54 1.49 0.05 3.36% 1.32
Sales / Working Capital 2.82 2.59 0.23 8.88% 2.18
SOLVENCY RATIOS
Owners Equity / Total Assets 0.56 0.59 -0.03 -5.08% 0.31
Long - Term Assets / owners' Equity 0.06 0.07 -0.01 -14.29% 0.47
Current Liabilities / Owners Equity ? ? ? ? 1.13
Total Liabilities / Owners Equity ? ? ? ? 2.03
Please answer the questionmarks and show computation