The following are the financial statements for Nederland Consumer Products Company for the fiscal year ended September
Question:
Calculate all the ratios, for which industry figures are available below, for Nederland and compare the firms ratios with the industry ratios.
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Nederland Consumer Products Company Income Statement for the Fiscal Year Ended September 30, 2017 $51,407 Net sales Cost of products sold Gross profit Marketing, research, administrative expense Depreciation 25,076 $26,331 15,746 758 $ 9,827 Operating income (loss) Interest ex pense 477 $ 9,350 2,869 Earnings (loss) before income taxes Income taxes $ 6,481 Net earnings (loss) Nederland Consumer Products Company Balance Sheet as of September 30, 2017 Liabilities and Equity: Assets: $ 5,469 $ 3,617 Cash and marketable securities Accounts payable Investment securities 423 Accrued and other liabilities 7,689 Accounts receivable 4,062 Taxes payable Debt due within one year 2,554 8,287 $22,147 Inventory 4,400 958 Deferred income taxes Total current liabilities 1,803 12,554 Prepaid expenses and other receivables Long-term debt Deferred income taxes 2,261 Total current assets $17,115 Other noncurrent liabilities 2,808 Property, plant, and equipment, 25,304 Total liabilities $39,770 Convertible class A preferred 1,526 at cost Less: Accumulated depreciation Net property, plant, and equipment Net goodwill and other intangible 11,196 $14,108 stock Common stock 2,141 Retained earnings Total stockholders' equity 23,900 13,611 $17,278 assets Other noncurrent assets 1,925 Total liabilities and equity $57,048 Total assets $57,048 Ratio Industry Average Current ratio 2,05 Quick ratio 0.78 Gross margin Net profit margin 23.9% 12.3% Debt ratio 0.23 Long-term debt to equity Interest coverage 0.98 5.62 ROA 5.3% ROE 18.8%
Step by Step Answer:
Ratio Industry Average Nederland Current rat...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-1119371403
4th edition
Authors: Robert Parrino, David S. Kidwell, Thomas Bates
Related Video
Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.
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