Long-term debt ratio
0.3
Times interest earned
8.0
Current ratio
1.1
Quick ratio
1.0
Cash ratio
0.3
Inventory turnover
4.0
Average collection period
73
days
Use the above information from the tables to work out the following missing entries, and then calculate the companyâs return on equity. Note: Turnover and the average collection period are calculated using start-of-year, not average, values. (Enter your answers in millions. Round intermediate calculations and final answers to 2 decimal places.)
INCOME STATEMENT
(Figures in $ millions)
Net sales
$
Cost of goods sold
Selling, general, and administrative expenses
23.00
Depreciation
33.00
Earnings before interest and taxes (EBIT)
$
Interest expense
Income before tax
$
Tax (35% of income before tax)
Net income
$
BALANCE SHEET
(Figures in $ millions)
This Year
Last Year
Assets
Cash and marketable securities
$
$ 33
Accounts receivable
47
Inventories
39
Total current assets
$
$ 119
Net property, plant, and equipment
38
Total assets
$
$157
Liabilities and shareholdersâ equity
Accounts payable
$40.00
$ 35
Notes payable
50.00
55
Total current liabilities
90
Long-term debt
21
Shareholdersâ equity
46
Total liabilities and shareholdersâ equity
$235
$157
please show all workings so i can see how you arrive at your answers
| Long-term debt ratio | 0.3 | ||
| Times interest earned | 8.0 | ||
| Current ratio | 1.1 | ||
| Quick ratio | 1.0 | ||
| Cash ratio | 0.3 | ||
| Inventory turnover | 4.0 | ||
| Average collection period | 73 | days | |
| Use the above information from the tables to work out the following missing entries, and then calculate the companyâs return on equity. Note: Turnover and the average collection period are calculated using start-of-year, not average, values. (Enter your answers in millions. Round intermediate calculations and final answers to 2 decimal places.) |
| INCOME STATEMENT | |
| (Figures in $ millions) | |
| Net sales | $ |
| Cost of goods sold |
|
| Selling, general, and administrative expenses | 23.00 |
| Depreciation | 33.00 |
| Earnings before interest and taxes (EBIT) | $ |
| Interest expense | |
| Income before tax | $ |
| Tax (35% of income before tax) | |
| Net income | $ |
| BALANCE SHEET | |||||||
| (Figures in $ millions) | |||||||
| This Year | Last Year | ||||||
| Assets | |||||||
| Cash and marketable securities | $ | $ 33 | |||||
| Accounts receivable | 47 | ||||||
| Inventories | 39 | ||||||
| Total current assets | $ | $ 119 | |||||
| Net property, plant, and equipment | 38 | ||||||
| Total assets | $ | $157 | |||||
| Liabilities and shareholdersâ equity | |||||||
| Accounts payable | $40.00 | $ 35 | |||||
| Notes payable | 50.00 | 55 | |||||
| Total current liabilities | 90 | ||||||
| Long-term debt | 21 | ||||||
| Shareholdersâ equity | 46 | ||||||
| Total liabilities and shareholdersâ equity | $235 | $157 | |||||
| please show all workings so i can see how you arrive at your answers | |||||||
Related questions
| Hillside,Inc. | ||||||||
| BALANCE SHEET | INCOME STATEMENT | |||||||
| ($ in millions) | ($ in millions) | |||||||
| ASSETS | LIABILITIES | Revenue | 28,681.10 | |||||
| Cash & Marketable Securities | 449.90 | Accounts Payable | 1,611.20 | Cost Of Goods Sold | 20,768.80 | |||
| Accounts Receivable | 954.80 | Salaries Payable | 225.20 | Gross Profit | 7,912.30 | |||
| Inventories | 3,645.20 | Other Current Liabilities | 1,118.80 | |||||
| Other Current Assets | 116.60 | Total Current Liabilities | 2,955.20 | Operating Expenses: | ||||
| Total Current Assets | 5,166.50 | Selling, General & Admin. | 5,980.80 | |||||
| Other Liabilities | 693.40 | Depreciation | 307.30 | |||||
| Machinery & Equipment | 1,688.90 | Operating income | 1,624.20 | |||||
| Land | 1,129.70 | Total Liabilities | 3,648.60 | |||||
| Buildings | 2,348.40 | Interest | - | |||||
| Depreciation | (575.60) | SHAREHOLDER'S EQUITY | Other Expense (Income) | (13.10) | ||||
| Property, Plant & Equip. - Net | 4,591.40 | Common Stock | 828.50 | Income Before Taxes | 1,637.30 | |||
| Other Long Term Assets | 120.90 | Retained Earnings | 5,401.70 | Income Taxes | 618.10 | |||
| Total Long-Term Assets | 4,712.30 | Total Shareholder's Equity | 6,230.20 | Net Income | 1,019.20 | |||
| Total Assets | 9,878.80 | Total Liabilities & Equity | 9,878.80 | |||||
| Number of Common Stock | ||||||||
| Shares Outstanding | 1,032,271 | |||||||
| Input Answers Below | Financial Performance Summary | |||||||
| LIQUIDITY RATIOS | ||||||||
| Current Ratio (times) | ||||||||
| Quick Ratio (times) | ||||||||
| Average Payment Period (days) | ||||||||
| ASSET MANAGEMENT RATIOS | ||||||||
| Total Asset Turnover (times) | ||||||||
| Average Collection Period (days) | ||||||||
| Inventory Turnover (times) | ||||||||
| FINANCIAL LEVERAGE RATIOS | ||||||||
| Total Debt to Total Assets | ||||||||
| Equity Multiplier (times) | ||||||||
| PROFITABILITY RATIOS | ||||||||
| Operating Profit Margin | ||||||||
| Net Profit Margin | ||||||||
| Return on Total Assets | ||||||||
| Return on Equity | ||||||||
| Earnings per Share | ||||||||
You have just been hired as a financial analyst for LydexCompany, a manufacturer of safety helmets. Your boss has asked youto perform a comprehensive analysis of the companyâs financialstatements, including comparing Lydexâs performance to its majorcompetitors. The companyâs financial statements for the last twoyears are as follows:
| Lydex Company Comparative Balance Sheet | ||||
| This Year | Last Year | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 980,000 | $ | 1,220,000 |
| Marketable securities | 0 | 300,000 | ||
| Accounts receivable, net | 2,780,000 | 1,880,000 | ||
| Inventory | 3,620,000 | 2,200,000 | ||
| Prepaid expenses | 260,000 | 200,000 | ||
| Total current assets | 7,640,000 | 5,800,000 | ||
| Plant and equipment, net | 9,560,000 | 9,070,000 | ||
| Total assets | $ | 17,200,000 | $ | 14,870,000 |
| Liabilities andStockholders' Equity | ||||
| Liabilities: | ||||
| Current liabilities | $ | 4,030,000 | $ | 3,020,000 |
| Note payable, 10% | 3,680,000 | 3,080,000 | ||
| Total liabilities | 7,710,000 | 6,100,000 | ||
| Stockholders' equity: | ||||
| Common stock, $75 par value | 7,500,000 | 7,500,000 | ||
| Retained earnings | 1,990,000 | 1,270,000 | ||
| Total stockholders' equity | 9,490,000 | 8,770,000 | ||
| Total liabilities andstockholders' equity | $ | 17,200,000 | $ | 14,870,000 |
| Lydex Company Comparative Income Statement and Reconciliation | ||||
| This Year | Last Year | |||
| Sales (all on account) | $ | 15,880,000 | $ | 13,780,000 |
| Cost of goods sold | 12,704,000 | 10,335,000 | ||
| Gross margin | 3,176,000 | 3,445,000 | ||
| Selling and administrativeexpenses | 1,208,000 | 1,612,000 | ||
| Net operating income | 1,968,000 | 1,833,000 | ||
| Interest expense | 368,000 | 308,000 | ||
| Net income before taxes | 1,600,000 | 1,525,000 | ||
| Income taxes (30%) | 480,000 | 457,500 | ||
| Net income | 1,120,000 | 1,067,500 | ||
| Common dividends | 400,000 | 533,750 | ||
| Net income retained | 720,000 | 533,750 | ||
| Beginning retained earnings | 1,270,000 | 736,250 | ||
| Ending retained earnings | $ | 1,990,000 | $ | 1,270,000 |
To begin your assignment you gather the following financial dataand ratios that are typical of companies in Lydex Companyâsindustry:
| Current ratio | 2.4 | |
| Acid-test ratio | 1.1 | |
| Average collection period | 32 | days |
| Average sale period | 60 | days |
| Return on assets | 9.5 | % |
| Debt-to-equity ratio | 0.7 | |
| Times interest earned ratio | 5.8 | |
| Price-earnings ratio | 10 | |
| 3. You decide, finally, to assess the companyâs liquidity andasset management. For both this year and last year, compute: a. Working capital. b. The current ratio. (Round your final answers to 2decimal places.) c. The acid-test ratio. (Round your final answers to 2decimal places.) d. The average collection period. (The accounts receivable atthe beginning of last year totaled $1,690,000.) (Use 365days in a year. Round your intermediate calculations and finalanswer to 2 decimal place.) e. The average sale period. (The inventory at the beginning oflast year totaled $2,050,000.) (Use 365 days in a year.Round your intermediate calculations and final answer to 2 decimalplace.) f. The operating cycle. (Round your intermediatecalculations and final answer to 2 decimal place.) g. The total asset turnover. (The total assets at the beginningof last year totaled $14,630,000.) (Round your finalanswers to 2 decimal places.) | ||
Lundberg Corporation's most recent balance sheet and incomestatement appear below:
| Statement of Financial Position December 31, Year 2 and Year 1 (in thousands of dollars) | ||||
| Year 2 | Year 1 | |||
| Asset: | ||||
| Current assets: | ||||
| Cash | $ | 160 | $ | 170 |
| Accounts receivable | 270 | 280 | ||
| Inventory | 170 | 160 | ||
| Prepaid expenses | 25 | 25 | ||
| Total current assets | 625 | 635 | ||
| Plant and equipment, net | 954 | 934 | ||
| Total assets | $ | 1,579 | $ | 1,569 |
| Liabilities and stockholders' equity: | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 220 | $ | 210 |
| Accrued liabilities | 110 | 110 | ||
| Notes payable, short term | 160 | 170 | ||
| Total current liabilities | 490 | 490 | ||
| Bonds payable | 250 | 300 | ||
| Total liabilities | 740 | 790 | ||
| Stockholders' equity: | ||||
| Preferred stock, $100 par value, 10% | 260 | 260 | ||
| Common stock, $1 par value | 100 | 100 | ||
| Additional paid-in capital--common stock | 110 | 110 | ||
| Retained earnings | 369 | 295 | ||
| Total stockholders' equity | 839 | 765 | ||
| Total liabilities and stockholders' equity | $ | 1,579 | $ | 1,555 |
| Income Statement For the Year Ended December 31, Year 2 (in thousands of dollars) | |||
| Sales (all on account) | $ | 1,480 | |
| Costof goods sold | 868 | ||
| Gross margin | 612 | ||
| Selling and administrative expenses | 334 | ||
| Netoperating income | 278 | ||
| Interest expense | 49 | ||
| Netincome before taxes | 229 | ||
| Income taxes (30%) | 69 | ||
| Netincome | $ | 160 | |
Dividends on common stock during Year 2 totaled $60 thousand.The market price of common stock at the end of Year 2 was $9.32 pershare. |
| k. | Compute theacid-test ratio for Year 2.(Round your answer to 1 decimalplace.) |
| Acid-test ratio |
| l. | Compute theaccounts receivable turnover for Year 2. (Round your answerto 2 decimal places.) |
| Accounts receivable turnover |
| m. | Compute the average collection period for Year 2. (Use365 days in a year. Do not round intermediatecalculations. Round your answer to one decimalplace.) |
| Average collection period | days |
| n. | Compute the inventory turnover for Year 2. (Round youranswer to 2 decimal places. Omit the "$" sign in yourresponse.) |
| Inventory turnover | $ |
| o. | Compute the average sale period for Year 2. (Use 365days in a year. Do not round intermediate calculations. Round youranswer to 1 decimal place.) |
| Average sale period | days |
| p. | Compute the times interest earned for Year 2. (Roundyour answer to 2 decimal places.) |
| Times interest earned |
| q. | Compute the debt-to-equity ratio for Year 2. (Round youranswer to 2 decimal places.) |
| Debt-to-equity ratio |
