21:12 21: 34:516171819.10-11 112 113 114 115 116 17 EMPIRE LARS INC. Comparative Balance Sheet December 31 This Year Last Year Empire Labs Inc. was organized several years ago to produce and market several new miracle drugs. The following data on the company are available for the past two years EMPIRE LABS INC. Comparative Income Statement For the Years Ended December 31 This Year Last Year Sales $20,000,000 $15.000.000 Les Cost of goods sold 13,000,000 9.000.000 Grossman 7,000,000 6,000,000 Less Operating expenses 5,260.000 4,560.000 Net operating income 1,740,000 1.440,000 Less Interest Expense 240,000 240.000 Net income before taxes 1,500,000 1,200,000 Les Income taxes (104) 450.000 360,000 Net income $ 1.050.000 $ 840.000 $ 200,000 1,500,000 3.000.000 100,000 4,800,000 5120.000 59.970,000 $ 400.000 800.000 1,200,000 100 000 2,500,000 5,400,000 57,900,000 Current au Cash Accounts recevable, net laventory Prepaid expenses Total current assets Plant and competent et Total Liabilities and Shareholders' Equity Liabilities Current liabilities Bonds payable 1 Totallites Shareholders' equity Preferred shares 8%. SIO par Common shares, no par (200,000 $5) Retained Gaming Total shareholders' equity Total abilities and shareholders' equit $2,500,000 2.000.000 $1,000,000 2.000.000 3.000.000 EMPIRE LARS INC. Comparative Retained Earnings Statement Fer the Years Ended December 31 This Year Retained earnings, January 1 $2,400,000 Add Net income (above) 1,050.000 Total 3,450.000 Deduct: Cash dividends paid Preferred dividends 120,000 Common dividends 350,000 Total dividends paid 400.000 Related camins December 31 $2.970,000 Last Year $1.900.000 840,000 2.800.000 1 500 000 1,000,000 2,970.000 5.470.000 $9.970,000 1 500 000 1,000,000 2.400.000 1.000.000 $7.000.000 120,000 280.000 400,000 $2,400,000 Although Empire Labs Inc. has been profitable since it was organized several years ago, the company is beginning to experience some difficulty in paying its bills as they come a Management has approached Security National Bank repuesting a two-yea, $500,000 loan to bolster the cash account Security National Bank has assigned you to evaluate the loan request You have gathered the following data relating to firms in the pharmaceutical industry Currento 24 to 1 Acid-test (quick) ratio 1 2 1 Averare are of receivables 16 days Inventory turnover in days 40 day Time interested DM 6 | 640 0.70101 The following additional information is available on Empire Labs Inc.: 1. All sales are on account. 2. At the beginning of last year, the accounts receivable balance was $600,000 and the inventory balance was $1,000,000 Required: 1. Compute the following amounts and ratios for both last year and this year. a. The working capital. 6. The current ratio. c. The acid-test ratio. d. The accounts receivable turnover in days. e. The inventory turnover in days. f. The times interest earned. g. The debt-to-equity ratio
