Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2010, financial statements: For the Year Ended December 31, 2010: Net revenues $ 31,800 Cost of services provided 11,200 Depreciation expense 6,500 Operating income $ 14,100 Interest expense 3,700 Income tax expense 3,000 Net income $ 7,400 At December 31, 2010: Assets Cash and short-term investments $ 3,100 Accounts receivable, net 10,300 Property, plant, and equipment, net 78,400 Total assets $ 91,800 Liabilities and Owners' Equity Accounts payable $ 1,600 Income taxes payable 1,300 Notes payable (long term) 45,300 Paid-in capital 14,000 Retained earnings 29,600 Total liabilities and owners' equity $ 91,800 At December 31, 2009, total assets were $80,000 and total owners' equity was $32,200. There were no changes in notes payable or paid-in capital during 2010. rev: 05-10-2011 2.value: 29 points Requirement 1: From the above income statement and balance sheet for Gerrard Construction Co. What other financial statements are required? rev: 05-10-2011 Statement of Cash flows Statement of changes in owners' equity Both statement of cash flows and statement of changes in owners' equity None 3.value: 29 points Requirement 2: Indicate the note disclosures that should be provided by Gerrard Construction Co. (Select all that apply) rev: 05-10-2011 The effects of accounting changes Pension and post -retirement plans Contingencies and commitments Events subsequent to the balance sheet Change in equity Number of employees Gross profit & Net profit Company's effective income tax rate Details of the company's employee benefit Significant accounting policies Earnings per share 4.value: 29 points Requirement 3: Assume that the balance of "Accounts Receivable, net" at December 31, 2009, was $8,600. Calculate the following activity measures for Gerrard Construction Co. for the year ended December 31, 2010: (a) Calculate the Accounts receivable turnover. (Round your answer to 1 decimal place.) Accounts receivable turnover times (b) Calculate the number of days' sales in accounts receivable. Use 365 days of the year. (Do not round your intermediate calculations. Round your answer to 1 decimal place.) Number of days' sales days rev: 05-10-2011 5.value: 29 points Requirement 4: Calculate the following financial leverage measures for Gerrard Construction Co. at December 31, 2010: (a) Calculate the debt ratio. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) Debt ratio % (b) Calculate the Debt/equity ratio. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) Debt/equity ratio % rev: 05-10-2011 6.value: 28 points Requirement 5: Gerrard Construction Co. wishes to lease some new earthmoving equipment from Caterpillar on a long-term basis. What impact (increase, decrease, or no effect) would a capital lease of $3.6 million have on the company's debt ratio and debt/equity ratio? The company debt ratio and the debt /equity ratio would rev: 05-10-2011 7.value: 28 points Requirement 6: (a) Calculate the amount of dividends declared and paid during the year ended December 31, 2010. (Input your answer in thousands of dollars. Omit the "$" sign in your response.) Dividends declared and paid $ (b) Review the answer from part (a). At this time. Assume that Gerrard Construction Co. had 1,035,000 shares of $1 par value common stock outstanding throughout 2010, and that the market price per share of common stock at December 31, 2010, was $18.73. Calculate the following profitability measures for the year ended December 31, 2010: (Round your intermediate calculations to two decimal places. Round your answers to 2 decimal places. Omit the "$" & "% " signs in your response.) 1. Earnings per share of common stock $ 2. Price/earnings ratio 3. Dividend yield % 4. Dividend payout ratio. % rev: 05-10-2011