These financial statement items are for Snyder Corporation at year-end, July 31, 2007.

Salaries payable Salaries expense Utilities expense Equipment Accounts payable Commission revenue Rent revenue Long-term note payable Common stock Cash Accounts receivable Accumulated depreciation Dividends Depreciation expense Retained earnings (beginning of the year)

$ 2,080 51,700 22,600 18,500 4,100 61,100 8,500 1,800 16,000 24,200 9,780 6,000 4,000 4,000 35,200 Exercises 81 Prepare a classified balance sheet.

(SO 1)

Compute and interpret profitability ratio.

(SO 2)

CEES Prepare financial statements.

(SOUS 8)

yd 82 CHAPTER 2. A Further Look at Financial Statements Instructions

(a) Prepare an income statement and a retained earnings statement for the year. Snyder Corporation did not issue any new stock during the year.

(b) Prepare a classified balance sheet at July 31.

(c) Compute the current ratio and debt to total assets ratio.

(d) Suppose that you are the president of Allied Equipment. Your sales manager has approached you with a proposal to sell $20,000 of equipment to Snyder. He would like to provide a loan to Snyder in the form of a 10%, 5-year note payable. Evaluate how this loan would change Snyder's current ratio and debt to total assets ratio, and discuss whether you would make the sale.

Compute liquidity ratios and 2-8 Nordstrom, Inc. operates department stores in numerous states. Selected financompare results. cial statement data (in millions of dollars) for the year ended January 31, 2004, are as

(SO 4) follows.

o—s End of Year Beginning of Year Cash and cash equivalents $ 361 $ 340 Receivables (net) 646 667 Merchandise inventory 917 902 Other current assets 648 616 Total current assets S20572 £25525, Total current liabilities $1,341 $1123 For the year, net sales were $7,131,000 and cost of goods sold was $4,559,000.

Instructions

(a) Compute working capital and the current ratio at the beginning of the year and at the end of the current year.

(b) Did Nordstrom’s liquidity improve or worsen during the year?

(c) Using the data in the chapter, compare Nordstrom’s liquidity with Best Buy’s.

Compute liquidity measures