Question
NOTE: I would love it if you can give me the formulas instead and I work on it, It will be greatly appreciated. P13-4 Computing
NOTE: I would love it if you can give me the formulas instead and I work on it, It will be greatly appreciated.
P13-4 Computing Ratios and Comparing Alternative Investment Opportunities LO 13-3, 13-4, 13-5, 13-6, 13-7
The current year financial statements for Blue Water Company and Prime Fish Company are presented below.
Blue Water | Prime Fish | ||||||
Balance sheet: | |||||||
Cash | $ | 41,100 | $ | 20,900 | |||
Accounts receivable (net) | 38,500 | 31,300 | |||||
Inventory | 98,500 | 40,600 | |||||
Property & equipment (net) | 141,500 | 402,200 | |||||
Other assets | 84,100 | 306,000 | |||||
Total assets | $ | 403,700 | $ | 801,000 | |||
Current liabilities | $ | 98,500 | $ | 50,500 | |||
Long-term debt (interest rate: 15%) | 65,700 | 60,200 | |||||
Capital stock ($10 par value) | 148,700 | 513,000 | |||||
Additional paid-in capital | 29,100 | 106,100 | |||||
Retained earnings | 61,700 | 71,200 | |||||
Total liabilities and stockholders equity | $ | 403,700 | $ | 801,000 | |||
Income statement: | |||||||
Sales revenue (1/2 on credit) | $ | 445,500 | $ | 801,000 | |||
Cost of goods sold | (240,500 | ) | (400,100 | ) | |||
Operating expenses | (161,200 | ) | (311,100 | ) | |||
Net income | $ | 43,800 | $ | 89,800 | |||
Other data: | |||||||
Per share stock price at end of current year | $ | 22.1 | $ | 16 | |||
Average income tax rate | 45 | % | 45 | % | |||
Dividends declared and paid in current year | $ | 33,100 | $ | 148,500 | |||
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Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blue Water is more conservative, and as its president has said, We avoid what we consider to be undue risk. Neither company is publicly held.
Required:
1. Complete a schedule that reflects a ratio analysis of each company. (Round your intermediate calculations and final answers to 2 decimal places. Enter percentage answers rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).)
Ratio WATER COMPANY COMPAN FISH Profitability ratios .Return on equity 2. Return on assets 3. Financial leverage percentage 4. Net profit margin 5. Earnings per share Turnover ratios 6. Total asset turnover 7. Fixed asset turnover 8. Receivable turnover Inventory turnover Liquidity ratios 10. Current ratio 11. Quick ratio 12 Cash ratio Solvency ratios: 13. Debt/equity ratio Market ratios: 1 14. Price/earnings ratio 15. Dividend yield ratio
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