Question
Financial statement analysis) Carson Electronics management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing
Financial statement analysis) Carson Electronics management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheets and income statements for the two firms are found here
Balance Sheet ($000) | Carson Electronics, Inc. | BGT Electronics, Inc |
Cash | $1,990 | $1,520 |
Accounts receivable | 4,540 | 5,960 |
Inventories | 1,460 | 2,500 |
Current assets | $7,990 | $9,980 |
Net fixed assets | 16,000 | 25,000 |
Total assets | $23,990 | $34,980 |
Accounts payable | $2,470 | $5,030 |
Accrued expenses | 1,010 | 1,470 |
Short-term notes payable | 3,550 | 1,510 |
Current liabilities | $7,030 | $8,010 |
Long-term debt | 8,000 | 3,950 |
Owners' equity | 8,960 | 23,020 |
Total liabilities and owners' equity | $23,990 | $34,980 |
Income Statement ($000) | Carson Electronics, Inc |
| |
Net sales (all credit) | $48,000 | $70,020 | |
Cost of goods sold | (36,050) | (41,980) | |
Gross profit | $11,950 | $28,040 | |
Operating expenses | (8,030) | (11,970) | |
Net operating income | $3,920 | $16,070 | |
Interest expense | (1,100) | (550) | |
Earnings before taxes | $2,820 | $15,520 | |
Income taxes (35%) | (1,128) | (6,208) | |
Net income | $1,692 | $9,312 | |
Total liabilities and owners' equity |
A. Calculate the following ratios for both Carson and BGT.
Current ratio Operating return on assets
Times interest earned Debt ratio
Inventory turnover Average collection period
Total asset turnover Fixed asset turnover
Operating profit margin Return on equity
B. Analyze the differences you observe between the two firms. Comment on what you view as weaknesses in the performance of Carson as compared to BGT that Carsons management might focus on to improve its operations.
A. Calculate the following ratios for both Carson and BGT:
Carsons current ratio is _____(Round to two decimal places)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started