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CP 1 3 - 6 ( Static ) Using Ratios to Compare Alternative Investment Opportunities [ LO 1 3 - 4 , LO 1 3
CPStatic Using Ratios to Compare Alternative Investment Opportunities LO LO LO The financial statements for Armstrong and Blair companies are summarized here: Armstrong Company Blair Company Balance Sheet Cash $ $ Accounts Receivable, Net Inventory Equipment, Net Other Assets Total Assets $ $ Current Liabilities $ $ Notes Payable longterm Total Liabilities Common Stock par $ Additional Paidin Capital Retained Earnings Total Liabilities and Stockholders Equity $ $ Income Statement Sales Revenue $ $ Cost of Goods Sold Other Expenses Net Income $ $ Other Data Estimated value of each share at end of year $ $ Selected Data from Previous Year Accounts Receivable, Net $ $ Inventory Equipment, Net Notes Payable longterm Total Stockholders Equity The companies are in the same line of business and are direct competitors in a large metropolitan area. Both have been in business approximately years and each has had steady growth. Despite these similarities, the management of each has a different viewpoint in many respects. Blair is more conservative, and as its president said, We avoid what we consider to be undue risk. Both companies use straightline depreciation, but Blair estimates slightly shorter useful lives than Armstrong. No shares were issued in the current year and neither company is publicly held. Blair Company has an annual audit by a CPA, but Armstrong Company does not. Assume the endofyear total assets and net equipment balances approximate the years average and all sales are on account. Required: Calculate the following ratios. TIP: To calculate EPS, use the balance in Common Stock to determine the number of shares outstanding. Common Stock equals the par value per share times the number of shares. Use days in a year. Do not round intermediate calculations and round your final answers to decimal places.
CPStatic Using Ratios to Compare Alternative Investment Opportunities LO LO LO
The financial statements for Armstrong and Blair companies are summarized here:
Armstrong Company Blair Company
Balance Sheet
Cash $ $
Accounts Receivable, Net
Inventory
Equipment, Net
Other Assets
Total Assets $ $
Current Liabilities $ $
Notes Payable longterm
Total Liabilities
Common Stock par $
Additional Paidin Capital
Retained Earnings
Total Liabilities and Stockholders Equity $ $
Income Statement
Sales Revenue $ $
Cost of Goods Sold
Other Expenses
Net Income $ $
Other Data
Estimated value of each share at end of year $ $
Selected Data from Previous Year
Accounts Receivable, Net $ $
Inventory
Equipment, Net
Notes Payable longterm
Total Stockholders Equity
The companies are in the same line of business and are direct competitors in a large metropolitan area. Both have been in business approximately years and each has had steady growth. Despite these similarities, the management of each has a different viewpoint in many respects. Blair is more conservative, and as its president said, We avoid what we consider to be undue risk. Both companies use straightline depreciation, but Blair estimates slightly shorter useful lives than Armstrong. No shares were issued in the current year and neither company is publicly held. Blair Company has an annual audit by a CPA, but Armstrong Company does not. Assume the endofyear total assets and net equipment balances approximate the years average and all sales are on account.
Required:
Calculate the following ratios. TIP: To calculate EPS, use the balance in Common Stock to determine the number of shares outstanding. Common Stock equals the par value per share times the number of shares. Use days in a year. Do not round intermediate calculations and round your final answers to decimal places.
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