=+PR 17-4B Nineteen measures of solvency and profitability objs. 2, 3

✔ 9. Ratio of liabilities to stockholders’

equity, 0.6 812 Chapter 17 Financial Statement Analysis Caylay Technologies Inc.

Comparative Balance Sheet December 31, 2010 and 2009 Dec. 31, 2010 Dec. 31, 2009 Assets Current assets:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 400,000 $ 180,000 Temporary investments . . . . . . . . . . . . . . . . . . . . . . . . . 614,000 240,000 Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . 390,000 283,600 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631,000 500,000 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000 52,500 __________ __________ Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . $2,080,000 $1,256,100 Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,450 375,000 Property, plant, and equipment (net) . . . . . . . . . . . . . . . . . 3,780,000 3,000,000 __________ __________ Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,184,450 $4,631,100 __________ __________ __________ __________ Liabilities Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 520,000 $ 427,500 __________ __________ Long-term liabilities:

Mortgage note payable, 10%, due 2015 . . . . . . . . . . . . . $1,000,000 —

Bonds payable, 12%, due 2019 . . . . . . . . . . . . . . . . . . . 800,000 $ 750,000 __________ __________ Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . $1,800,000 $ 750,000 __________ __________ Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,320,000 $1,177,500 __________ __________ Stockholders’ Equity Preferred $3.00 stock, $100 par . . . . . . . . . . . . . . . . . . . . . $ 800,000 $ 800,000 Common stock, $10 par . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000 1,200,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,864,450 1,453,600 __________ __________ Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . $3,864,450 $3,453,600 __________ __________ Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . $6,184,450 $4,631,100 Instructions