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28 Sep 2019
Write an assessment of the company's financial performance,using ratios to support your conclusion. What can you concludeabout the company's liquidity, solvency, and profitability? Be sureto include the ratios calculation to support your conclusion.
Use the financial statements provided below to calculate thefollowing financial ratios:
2012 2011 1. Current Ratio 10.915 6.715 2. Quick Ratio 11.307 7.524 3. Long-Term Debt-to-Equity Ratio 2.785 3.834 4. Debt-to-Equity Ratio 2.785 3.834 5. Long-Term Debt Ratio 2.866 3.988 6. Accounts Receivable Turnover Ratio (Assume that60% of Sales are Credit 25.491 8.908 7. Inventory Turnover Ratio (Assume 2011 beginninginventory was -0-.) -0.715 -0.450 8. Asset Turnover Ratio 0.163 0.076 9. Gross Profit Percentage 0.731 0.806 10. Net Profit Margin Percentage 0.375 0.311 11. Return on Assets 0.061 0.024 12. Return on Equity 0.237 0.118
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Compartive Balance Sheets
2012 2011
Assets Current Assets Cash $198,456 $147,333 Accounts Receivable
4,000 5,000 Allowance for Uncollectible Accounts (250) 80 Supplies 200 250 Inventory 35,000 32,000 Total current assets 237,406 184,663 Property, Plant, and Equipment Equipment 60,000 15,000 Accumulated Depreciation - Equipment (14,000) (1,000) Vehicles 35,000 35,000 Accumulated Depreciation - Vehicles (4,800) (2,400) Building 684,375 684,375 Accumulated Depreciation - Building (25,000) (12,500) Land 46,875 46,875 Land Improvements 23,750 23,750 Accumulated Depreciation - Land Improvements (2,539) (663) Total PP&E 803,661 788,437 Total Assets $1,041,067 $973,100 Liabilities and Stockholders' Equity Current Liabilities Accounts Payable $20,000 $24,000 Wages Payable 1,000 500 Warranties Payable 750 500 Notes Payable 0 2,500 Total current liabilities 21,750 27,500 Long-term Liabilities Bonds Payable 750,000 450,000 Mortgage Payable 0 300,000 Total long-term liabilities 750,00 750,000 Total liabilities 771,750 777,500 Stockholder's Equity Common Stock 125,000 125,000 Paid-in capital in excess of par - common 25,000 25,000 Preferred Stock 40,000 20,000 Paid-in capital in excess of par - preferred 25,000 15,000 Less: Treasury Stock (3,000) (3,000) Paid-in capital - treasury stock 500 500 Retained Earnings 56,817 13,100 Total stockholders' equity 269,317 195,600 Total liabilities and stockholders' equity $1,041,067 $973,100
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Comparative Income Statements
2012 2011 Service Revenue $93,693 $50,230 Sales 76,250 24,000 Cost of Goods Sold (45,750) (14,400) Gross Margin $124,193 $59,830 Operating Expenses: Advertising Expense $7,500 $5,000 Bad Debt Expense 330 0 Depreciation Expense - Equipment 13,000 5,667 Depreciation Expense - Vehicles 2,400 2,400 Depreciation Expense - Building 12,500 12,500 Depreciation Expense - Land Improvements 1,876 663 Wages Expense 22,870 10,500 Total Expenses 60,476 36,730 Net Income $63,717 $23,100
Write an assessment of the company's financial performance,using ratios to support your conclusion. What can you concludeabout the company's liquidity, solvency, and profitability? Be sureto include the ratios calculation to support your conclusion.
Use the financial statements provided below to calculate thefollowing financial ratios:
2012 | 2011 | |
1. Current Ratio | 10.915 | 6.715 |
2. Quick Ratio | 11.307 | 7.524 |
3. Long-Term Debt-to-Equity Ratio | 2.785 | 3.834 |
4. Debt-to-Equity Ratio | 2.785 | 3.834 |
5. Long-Term Debt Ratio | 2.866 | 3.988 |
6. Accounts Receivable Turnover Ratio (Assume that60% of Sales are Credit | 25.491 | 8.908 |
7. Inventory Turnover Ratio (Assume 2011 beginninginventory was -0-.) | -0.715 | -0.450 |
8. Asset Turnover Ratio | 0.163 | 0.076 |
9. Gross Profit Percentage | 0.731 | 0.806 |
10. Net Profit Margin Percentage | 0.375 | 0.311 |
11. Return on Assets | 0.061 | 0.024 |
12. Return on Equity | 0.237 | 0.118 |
Get Your Motor Runnin'
Compartive Balance Sheets
2012 | 2011 | |
Assets | ||
Current Assets | ||
Cash | $198,456 | $147,333 |
Accounts Receivable | 4,000 | 5,000 |
Allowance for Uncollectible Accounts | (250) | 80 |
Supplies | 200 | 250 |
Inventory | 35,000 | 32,000 |
Total current assets | 237,406 | 184,663 |
Property, Plant, and Equipment | ||
Equipment | 60,000 | 15,000 |
Accumulated Depreciation - Equipment | (14,000) | (1,000) |
Vehicles | 35,000 | 35,000 |
Accumulated Depreciation - Vehicles | (4,800) | (2,400) |
Building | 684,375 | 684,375 |
Accumulated Depreciation - Building | (25,000) | (12,500) |
Land | 46,875 | 46,875 |
Land Improvements | 23,750 | 23,750 |
Accumulated Depreciation - Land Improvements | (2,539) | (663) |
Total PP&E | 803,661 | 788,437 |
Total Assets | $1,041,067 | $973,100 |
Liabilities and Stockholders' Equity | ||
Current Liabilities | ||
Accounts Payable | $20,000 | $24,000 |
Wages Payable | 1,000 | 500 |
Warranties Payable | 750 | 500 |
Notes Payable | 0 | 2,500 |
Total current liabilities | 21,750 | 27,500 |
Long-term Liabilities | ||
Bonds Payable | 750,000 | 450,000 |
Mortgage Payable | 0 | 300,000 |
Total long-term liabilities | 750,00 | 750,000 |
Total liabilities | 771,750 | 777,500 |
Stockholder's Equity | ||
Common Stock | 125,000 | 125,000 |
Paid-in capital in excess of par - common | 25,000 | 25,000 |
Preferred Stock | 40,000 | 20,000 |
Paid-in capital in excess of par - preferred | 25,000 | 15,000 |
Less: Treasury Stock | (3,000) | (3,000) |
Paid-in capital - treasury stock | 500 | 500 |
Retained Earnings | 56,817 | 13,100 |
Total stockholders' equity | 269,317 | 195,600 |
Total liabilities and stockholders' equity | $1,041,067 | $973,100 |
Get Your Motor Runnin'
Comparative Income Statements
2012 | 2011 | |
Service Revenue | $93,693 | $50,230 |
Sales | 76,250 | 24,000 |
Cost of Goods Sold | (45,750) | (14,400) |
Gross Margin | $124,193 | $59,830 |
Operating Expenses: | ||
Advertising Expense | $7,500 | $5,000 |
Bad Debt Expense | 330 | 0 |
Depreciation Expense - Equipment | 13,000 | 5,667 |
Depreciation Expense - Vehicles | 2,400 | 2,400 |
Depreciation Expense - Building | 12,500 | 12,500 |
Depreciation Expense - Land Improvements | 1,876 | 663 |
Wages Expense | 22,870 | 10,500 |
Total Expenses | 60,476 | 36,730 |
Net Income | $63,717 | $23,100 |
Trinidad TremblayLv2
28 Sep 2019