2-1 in 20147 2-3 Discuss some of the limitations associated with performing ratio (financial statement) analysis. What is the most important ingredient (input) in completing ratio analysis? Explain why. Robust Robots (RR) recently issued 100,000 shares of common stock at $7 per share. The stock has a par value equal to $3 per share. What amount of the $700,000 that RR raised should be reported in the common stock at par ac count, and what amount should be reported in the "Pald-in capital account? Crooked Golf's 2014 income statement shows that net income was $90,000, depreciation was $25,000, and taxes were $60,000. What was Crooked Golf's net cash flow in 2014? HighTech Wireless just published its 2014 in come statement, which shows net income equal to $240,000. The statement also shows that op- erating expenses were 5500,000 before include ing depreciation, depreciation was $100,0001 and the tax rate was 40 percent. If High Tech has no debt, what were its sales revenues in 2014? What was its 2014 net cash flow? Credit Card of America (CCA) has a current ra tio of 3.5 and a quick ratio of 3.0. If its total current assets equal $73,500, what are CCAS (a) current liabilities and (b) inventory? At the end of the year, Wrinkle Free Laundry (WFL) had $150,000 in total assets. (a) If WF's total assets turnover was 2.0, what were its sales revenues? (b) If WFLS return on assets was 6 percent, what were its net income and net profit margin? The balance sheet for Panoramic Open Pic- tures (POP) shows $300,000 in total assets and $200,000 in total liabilities. POP's return on as- sets (ROA) is 5 percent. Compute POP's (a) net income for the year and (b) its return on equity (ROE). POP has no preferred stock. Legacy Cleaning has a debt ratio equal to 40 percent, total assets equal to $750,000, return on assets CROA) at 6 percent, and total assets turnover of 3.0. (a) If it has no preferred stock what amount of common equity does Legacy have? (b) What is Legacy's net profit margin? At the end of the year, Water Works Interna- tional ( WW) had $10,000 in total assets its total assets turnover was 2.5, and its return on assets (ROA) was 4 percent. What were wWi's (a) sales revenues and (b) net profit margin? 2-12 Last year, Delightful Desserts had a quick ratio of 1.8, a current ratio of 5.0, an inventory tum over of 7, total current assets of $340,000, and cash and equivalents of $43,000. If the cost of goods sold equaled 80 percent of sales, what were Bailey's annual sales and DSO? Wiley Wilderness pays 6 percent interest on its outstanding debt, which equals $200,000. The company's sales are $540,000, its tax rate is 40 percent and its net profit margin is 4 percent (a) What is Wiley's TIE? (b) Wiley's wants to main tain a TI equal to 6.0, what must its sales equal? The most recent balance sheet of Infinity Infor- mation Systems (ILS) shows that the company has $35 million of common equity and 7 mil- lion shares of common stock outstanding. The company's common stock has a market value equal to 58 per share. IIS's net income was $14 million. What are IS's (a) P/E ratio and (b) MB ratio? Smitty's Finger-Licking BBQ has a total assets turnover equal to 20, a return on equity (ROE) equal to 15 percent, and a debt ratio equal to 60 percent. If Smitty's is financed with debt and common stock, what are its (a) return on assets CROA) and (b) net profit margin? Duncan Boutique's total assets are $440,000, its return on assets (ROA) is 8 percent, and its debt ratio is 20 percent. What are Duncan's (a) net income and (b) return on equity (ROE)? Horatio's Hot Dogs' current assets equal $260,000. The company's return on assets (ROA) is 4 percent, its net income is $140,000, its long- term debt equals $1,755,000, and 35 percent of its assets are financed with common equity. Horatio's has no preferred stock Compute the company's current ratio. I Fido's Dog Spa's financial statements show that its total assets equal $100,000, its return on as- sets (ROA) is 3 percent, and its return on equity (ROE) is 5 percent. (a) Compute the company's net income. (b) What portion of total assets is financed with debt? Fido's has no preferred stock. Sixty 160) percent of Extreme Well Drilling's as- sets are financed with common equity, which is the only type of equity financing the company has. Extreme's current ratio is 5.0, its total assets turnover is 4.0, current assets equal $150,000, and its sales equal $1,800,000. What amount of Extreme's total liabilities is long term, and what amount is short term (current assets)? North South Airlines generated the following information from its financial statements: (1) PIE ratio equals 15.0.2) common stock market price per share is 530.03) fixed assets turnover equals 8.0. (4) current ratio equals 5.0. (5) current - abilities equal $300,000. (6) net profit margin equals 4 percent, and (7) 60,000 shares of com mon stock are outstanding. What are North South's (a) return on assets (ROA) and (b) total assets turnover? 2-18 2-1 in 20147 2-3 Discuss some of the limitations associated with performing ratio (financial statement) analysis. What is the most important ingredient (input) in completing ratio analysis? Explain why. Robust Robots (RR) recently issued 100,000 shares of common stock at $7 per share. The stock has a par value equal to $3 per share. What amount of the $700,000 that RR raised should be reported in the common stock at par ac count, and what amount should be reported in the "Pald-in capital account? Crooked Golf's 2014 income statement shows that net income was $90,000, depreciation was $25,000, and taxes were $60,000. What was Crooked Golf's net cash flow in 2014? HighTech Wireless just published its 2014 in come statement, which shows net income equal to $240,000. The statement also shows that op- erating expenses were 5500,000 before include ing depreciation, depreciation was $100,0001 and the tax rate was 40 percent. If High Tech has no debt, what were its sales revenues in 2014? What was its 2014 net cash flow? Credit Card of America (CCA) has a current ra tio of 3.5 and a quick ratio of 3.0. If its total current assets equal $73,500, what are CCAS (a) current liabilities and (b) inventory? At the end of the year, Wrinkle Free Laundry (WFL) had $150,000 in total assets. (a) If WF's total assets turnover was 2.0, what were its sales revenues? (b) If WFLS return on assets was 6 percent, what were its net income and net profit margin? The balance sheet for Panoramic Open Pic- tures (POP) shows $300,000 in total assets and $200,000 in total liabilities. POP's return on as- sets (ROA) is 5 percent. Compute POP's (a) net income for the year and (b) its return on equity (ROE). POP has no preferred stock. Legacy Cleaning has a debt ratio equal to 40 percent, total assets equal to $750,000, return on assets CROA) at 6 percent, and total assets turnover of 3.0. (a) If it has no preferred stock what amount of common equity does Legacy have? (b) What is Legacy's net profit margin? At the end of the year, Water Works Interna- tional ( WW) had $10,000 in total assets its total assets turnover was 2.5, and its return on assets (ROA) was 4 percent. What were wWi's (a) sales revenues and (b) net profit margin? 2-12 Last year, Delightful Desserts had a quick ratio of 1.8, a current ratio of 5.0, an inventory tum over of 7, total current assets of $340,000, and cash and equivalents of $43,000. If the cost of goods sold equaled 80 percent of sales, what were Bailey's annual sales and DSO? Wiley Wilderness pays 6 percent interest on its outstanding debt, which equals $200,000. The company's sales are $540,000, its tax rate is 40 percent and its net profit margin is 4 percent (a) What is Wiley's TIE? (b) Wiley's wants to main tain a TI equal to 6.0, what must its sales equal? The most recent balance sheet of Infinity Infor- mation Systems (ILS) shows that the company has $35 million of common equity and 7 mil- lion shares of common stock outstanding. The company's common stock has a market value equal to 58 per share. IIS's net income was $14 million. What are IS's (a) P/E ratio and (b) MB ratio? Smitty's Finger-Licking BBQ has a total assets turnover equal to 20, a return on equity (ROE) equal to 15 percent, and a debt ratio equal to 60 percent. If Smitty's is financed with debt and common stock, what are its (a) return on assets CROA) and (b) net profit margin? Duncan Boutique's total assets are $440,000, its return on assets (ROA) is 8 percent, and its debt ratio is 20 percent. What are Duncan's (a) net income and (b) return on equity (ROE)? Horatio's Hot Dogs' current assets equal $260,000. The company's return on assets (ROA) is 4 percent, its net income is $140,000, its long- term debt equals $1,755,000, and 35 percent of its assets are financed with common equity. Horatio's has no preferred stock Compute the company's current ratio. I Fido's Dog Spa's financial statements show that its total assets equal $100,000, its return on as- sets (ROA) is 3 percent, and its return on equity (ROE) is 5 percent. (a) Compute the company's net income. (b) What portion of total assets is financed with debt? Fido's has no preferred stock. Sixty 160) percent of Extreme Well Drilling's as- sets are financed with common equity, which is the only type of equity financing the company has. Extreme's current ratio is 5.0, its total assets turnover is 4.0, current assets equal $150,000, and its sales equal $1,800,000. What amount of Extreme's total liabilities is long term, and what amount is short term (current assets)? North South Airlines generated the following information from its financial statements: (1) PIE ratio equals 15.0.2) common stock market price per share is 530.03) fixed assets turnover equals 8.0. (4) current ratio equals 5.0. (5) current - abilities equal $300,000. (6) net profit margin equals 4 percent, and (7) 60,000 shares of com mon stock are outstanding. What are North South's (a) return on assets (ROA) and (b) total assets turnover? 2-18