Question
Comparative financial statements for Na Pali Coast Company for the years ending December 31, 20-1 and 20-2 are provided. Na Pali Coast Company Comparative Income
Comparative financial statements for Na Pali Coast Company for the years ending December 31, 20-1 and 20-2 are provided.
Na Pali Coast Company |
Comparative Income Statement |
For Years Ended December 31, 20-2 and 20-1 |
1 |
| 20-2 | 20-1 |
2 | Net sales | $466,451.00 | $291,613.00 |
3 | Cost of goods sold | 285,889.00 | 188,626.00 |
4 | Gross profit | $180,562.00 | $102,987.00 |
5 | Operating expenses | 125,650.00 | 78,200.00 |
6 | Operating income | $54,912.00 | $24,787.00 |
7 | Other expenses | 1,200.00 | 500.00 |
8 | Income before income taxes | $53,712.00 | $24,287.00 |
9 | Income tax expense | 18,250.00 | 7,285.00 |
10 | Net income | $35,462.00 | $17,002.00 |
Na Pali Coast Company |
Comparative Balance Sheet |
December 31, 20-2 and 20-1 |
1 |
| 20-2 | 20-1 |
2 | Assets |
|
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3 | Current assets: |
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4 | Cash | $8,600.00 | $7,500.00 |
5 | Government notes | 3,000.00 | 2,000.00 |
6 | Accounts receivable (net) | 10,500.00 | 8,600.00 |
7 | Merchandise inventory | 53,600.00 | 33,200.00 |
8 | Supplies and prepayments | 4,500.00 | 3,200.00 |
9 | Total current assets | $80,200.00 | $54,500.00 |
10 | Property, plant, and equipment: |
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11 | Land | $40,000.00 | $40,000.00 |
12 | Building (net) | 200,000.00 | 150,000.00 |
13 | Delivery equipment (net) | 13,000.00 | 15,000.00 |
14 | Office equipment (net) | 5,400.00 | 6,000.00 |
15 | Patents | 5,000.00 | 6,000.00 |
16 | Total property, plant, and equipment | $263,400.00 | $217,000.00 |
17 | Total assets | $343,600.00 | $271,500.00 |
18 | Liabilities |
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19 | Current liabilities: |
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20 | Notes payable | $5,000.00 | $3,000.00 |
21 | Accounts payable | 28,700.00 | 22,300.00 |
22 | Accrued and withheld payroll taxes | 4,200.00 | 5,600.00 |
23 | Accrued interest payable | 500.00 | 1,700.00 |
24 | Total current liabilities | $38,400.00 | $32,600.00 |
25 | Long-term liabilities: |
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26 | Bonds payable | 50,000.00 | 20,000.00 |
27 | Total liabilities | $88,400.00 | $52,600.00 |
28 | Stockholders Equity |
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29 | Common stock ($5 par) | $115,000.00 | $100,000.00 |
30 | Paid-in capital in excess of par | 65,000.00 | 60,000.00 |
31 | Retained earnings | 75,200.00 | 58,900.00 |
32 | Total stockholders equity | $255,200.00 | $218,900.00 |
33 | Total liabilities and stockholders equity | $343,600.00 | $271,500.00 |
Required: | |
1. | Perform horizontal analysis of the comparative income statement and balance sheet. |
2. | Perform vertical analysis of the comparative income statement and balance sheet. |
3. | Compute the following liquidity measures for 20-2: |
(a) | Working capital |
(b) | Current ratio |
(c) | Quick or acid-test ratio |
4. | Compute the following activity measures for 20-2: |
(a) | Accounts receivable turnover and average number of days to collect receivables (Assume that sales on account for 20-2 were $120,000.) |
(b) | Merchandise inventory turnover and average number of days to sell inventory |
(c) | Asset turnover |
5. | Compute the following profitability measures for 20-2: |
(a) | Profit margin ratio |
(b) | Return on assets |
(c) | Return on common stockholders equity |
(d) | Earnings per share of common stock |
6. | Compute the following leverage measures for 20-2: |
(a) | Debt-to-equity ratio |
(b) | Times interest earned ratio (Assume interest expense for 20-2 was $1,200.) |
7. | Compute the following market measures for 20-2: |
(a) | Price-earnings ratio (The market price of Na Pali Coast Companys common stock was $23.00 on December 31, 20-2.) |
(b) | Book value per share of common stock |
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