ACCT 2000 Chapter : CH 2 Notes
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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. Specific point in time: groups together similar assets and similar liabilities, using standard classifications. Current assets (hold less than a year)(use up consume sell) assets you expect to pull for less than a year, such as inventory, supplies. Long term investments (own such as stock for another company, but don"t use in the business) Intangibles (assets that you own but cannot see or touch) assets we own that have value that you cant see/touch, ex: trademarks, copywrites. Cash -> provide services mows lawns -> bills customer-> customer pays-> (back to cash) Current assets will be listed in order of liquidity. Stockholders equity is sometimes called the claims of owners.
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| Six Measures of Solvency or Profitability The following data were taken from the financial statements of Olvideo Enterprises Inc. for the current fiscal year.
Assuming that long-term investments totaled $1,983,000 throughout the year and that total assets were $3,767,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place.
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| 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 | |||||
| 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 | |||||
