Question
Income statement sales revenue 160, 000 less: cost of a good sold 106,000 gross profif 54, 000 es: operating expenses selling expenses 16,000 general and
Income statement
sales revenue | 160, 000 |
less: cost of a good sold | 106,000 |
gross profif | 54, 000 |
es: operating expenses | |
selling expenses | 16,000 |
general and administrative expenses | 10,000 |
lease expense | 1,000 |
depreceation expense | 10,000 |
total operating expense | 37,000 |
operating profit | 17,000 |
es:interest expense | 6,100 |
net profits before taxes | 10,900 |
es:taxes | 4,360 |
net profits after taxes | 6,450 |
Balance sheet
Assets | |
cash | 500 |
Marketable securities | 1, 000 |
Accounts receivable | 25,000 |
inventories | 45,500 |
Total currents assets | 72,000 |
Land | 26,000 |
Buildings and equipment | 90,000 |
Less: accumulated depreciation | 38,000 |
Net fixed assets | 78,000 |
Total assets | 150,000 |
Liabilities and stockholders equity |
|
Account payable | 22,000 |
Notes payable | 47,000 |
Total current liabilities | 69,000 |
Log-term debt | 22, 950 |
Common stock* | 31,500 |
Retained earings | 26,550 |
Total liabilities and stockholders equity | 150,000 |
- The firms 3,000 outstanding shares of common stock closed 2019 at a price of $25 per share
Instructions:
- Prepare a common-size statements for the Income Statement
- Use the preceding financial statements to complete the following table. Assume the industry averages given in the table are applicable for both 2018 and 2019
- Analyze the results and explain the company changes during both years.
Ratio | Industry average | Actual 2018 | Actual 2019 |
Current ratio | 1.80 | 1.84 | |
Quick ratio | 0.70 | 0.78 | |
Inventory turover* | 2.50 | 2.59 | |
Number of days sales in inventory | 37.5 days | 36.5 days | |
|
|
| |
Times Interest earned ratio | 3.8 | 4.0 | |
Gross profit margin | 38% | 40% | |
Net profit margin | 3.5% | 3.6% | |
Return on total assets | 4.0% | 4.0% | |
Return on common equity | 9.5% | 8.0 | |
Market/bookratio | 1.1 | 1.2 |
*Based on a 365-day year and on end-of-year figures.
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