Question
Financial statement analysis enables the financial statement user to make informed decisions about a company. The financial statements of LIMA CORPORATION for the year 2015
Financial statement analysis enables the financial statement user to make informed decisions about a company. The financial statements of LIMA CORPORATION for the year 2015 and 2016 are presented below: LIMA CORPORATION BALANCE SHEET December 31 CURRENT ASSETS 2016 2015 Cash and short-term investments. $ 276 $232 Accounts receivable (net).. $ 523 $379 Inventories... $ 438 $ 382 Prepaid expenses.. $ 97 $ 81 Total current assets.. $1,334 $ 1,074 Property, plant and equipment (net). $ 3,251 $2,799 Intangibles and other assets.. $ 177 $ 251 Total assets... Liabilities and stockholders 'Equity $4,762 $4,124 Current liabilities. $1,994 $1,621 Long-term liabilities. $ 793 $ 752 Stockholders 'equity.. $1,975 $1,751 Total liabilities and stockholders 'equity... $4,762 $4,124 LIMA CORPORATION INCOME STATEMENT FOR THE YEAR ENDED December 31 2016 2015 Revenues.. $5,194 $4,873 Expenses Cost of goods sold.. $2,596 $2,364 Selling and administrative expenses.. $1,963 $1,732 Interest expense. $ 52 $ 46 Total expenses.... Income before income taxes. $4,611 583 $4,142 731 Income tax expense.. 175 219 Net income.... INSTRUCTIONS $ 408 $ 512 Compute the following ratios for LIMA CORPORATION FOR 2016 and 2015. Explain based on each ratio if LIMA CORPORATION IS DOING WELL OR BAD. *Current ratio. *Profit margin ratio. *Debt to total assets. *Acid-test ratio. *Asset turnover. *Times interest earned. EXPLAIN WHY CORPORATIONS ISSUE BONDS RATHER THAN STOCKS. EXPAND ON EACH OF YOUR REASONS AND GIVE AN EXAMPLE TO CLARIFY YOUR
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