Note: This question has two parts. Make sure to answer both.
Part I
Granite Construction Inc. is a Heavy/Highway contractor and they have consolidated their fiscal year 2014 and 2015 financial report which are located at the back of this test. Use this information to compute the financial ratios of the construction company as they relate to Liquidity, Debt Management, Asset Management, and Profitability.
Note: There are three financial statements in which you will use to help compute some of the financial ratios. Take a careful look at each line item for all statements and make note of any assumption you may need to use.
Part II
Interpret Granite Construction Inc. financial health in the industry (i.e. In 4-5 sentences, describe how the company is doing in terms of the financial ratios you calculated).
110 Cash 120 Accounts Receivable-Trade 121 Accounts Receivable-Retention 130 Inventory 140 Costs and Profits in Excess of Billings 150 Notes Receivable 155 Due From Construction Loans 160 Prepaid Expenses 199 Other Current Assets Building and Land 210 220 Construction Equipment 230 Trucks and Autos 240 Office Equipment 250 260 Capital Leases 299 Other Assets Less Acc. Depreciation 310 Accounts Payable-Trade 311 Accounts Payable-Retention 320 Billings in Excess of Costs and Profits 330 Notes Payable 340 Accrued Payroll 341 Accrued Payables 342 Accrued Taxes 343 Accrued Insurance 344 Accrued Vacation 350 Capital Leases Payable 360 Warranty Reserves 379 Other Current Liabilities 380 Long-Term Liabilities 410 Capital Stock 420 Retained Earnings 430 Current Period Net Income 500 Revenue 610 Materials 620 Labor 630 Subcontract 640 Equipment. 650 Other Chart of Accounts. 710 Rent and Lease Payments 720 Depreciation T 1101 730 Repairs and Maintenance 740 Fuel and Lubrication 750 Taxes, Licenses, and Insurance 798 Equipment Costs Charged to Employees 799 Equipment Costs Charged to Jobs 805 Advertising 806 Promotion 810 Car and Truck Expenses 811 Computer and Office Furniture 812 Repairs and Maintenance 819 Depreciation 820 Employee Wages and Salaries 821 Employee Benefits 822 Employee Retirement 823 Employee Recruiting 824 Employee Training 825 Employee Taxes 830 Insurance 835 Taxes and Licenses 840 Office Supplies 841 Office Purchase 842 Office Rent 843 Office Utilities 844 Postage and Delivery 845 Janitorial and Cleaning 846 Telephone 850 Charitable Contributions 855 Dues and Memberships 860 Publications and Subscriptions 865 Legal and Professional Services. 870 Meals and Entertainment 875 Travel 880 Bank Fees 881 Interest Expense 885 Bad Debts 891 Unallocated Labor 892 Unallocated Materials 893 Warranty Expense 898 Miscellaneous 899 Overhead Charged to Jobs 910 Other Income 920 Other Expense 950 Income Tax Granite Construction Balance Sheet ASSETS CURRENT ASSETS Cash Accounts Receivable-Trade Accounts Receivable-Retention Inventory Costs and Profits in Excess of Billings Notes Receivable Prepaid Expenses Other Current Assets Total Current Assets. FIXED AND OTHER ASSETS Construction Equipment Trucks and Autos Office Equipment Total Fixed Assets Less Acc. Depreciation Net Fixed Assets Other Assets Total Assets Granite Construction Inc. 2015 Year LIABILITIES Current Liabilities Accounts Payable-Trade Accounts Payable-Retention Billings in Excess of Costs and Profits Notes Payable Accrued Payables Accrued Taxes Accrued Vacation Other Current Liabilities Total Current Liabilities Long-Term Liabilities Total Liabilities OWNER'S EQUITY Capital Stock Retained Earnings Current Period Net Income Total Equity Total Liabilities and Equity 32,387 74,526 6,888 0 9,177 3,139 735 3,114 129,966 39,229 8,981 8,057 56,267 46,562 9,705 45,996 185,667 38,682 3,768 1,424 4,022 4,574 2,718 606 6,605 62,399 61,544 123,943 10,000 51,724 0 61,724 185,667 2014 Year 34,826 38,212 4,235 0 4,549 0 1,061 1,119 84,002 39,229 8,981 8,057 56,267 39,889 16,378 50,462 150,842 35,772 3,536 2,022 5,791 2,254 2,405 308 5,330 57,418 48.916 106,334 10,000 34,508 0 44,508 150,842 110 Cash 120 Accounts Receivable-Trade 121 Accounts Receivable-Retention 130 Inventory 140 Costs and Profits in Excess of Billings 150 Notes Receivable 155 Due From Construction Loans 160 Prepaid Expenses 199 Other Current Assets Building and Land 210 220 Construction Equipment 230 Trucks and Autos 240 Office Equipment 250 260 Capital Leases 299 Other Assets Less Acc. Depreciation 310 Accounts Payable-Trade 311 Accounts Payable-Retention 320 Billings in Excess of Costs and Profits 330 Notes Payable 340 Accrued Payroll 341 Accrued Payables 342 Accrued Taxes 343 Accrued Insurance 344 Accrued Vacation 350 Capital Leases Payable 360 Warranty Reserves 379 Other Current Liabilities 380 Long-Term Liabilities 410 Capital Stock 420 Retained Earnings 430 Current Period Net Income 500 Revenue 610 Materials 620 Labor 630 Subcontract 640 Equipment. 650 Other Chart of Accounts. 710 Rent and Lease Payments 720 Depreciation T 1101 730 Repairs and Maintenance 740 Fuel and Lubrication 750 Taxes, Licenses, and Insurance 798 Equipment Costs Charged to Employees 799 Equipment Costs Charged to Jobs 805 Advertising 806 Promotion 810 Car and Truck Expenses 811 Computer and Office Furniture 812 Repairs and Maintenance 819 Depreciation 820 Employee Wages and Salaries 821 Employee Benefits 822 Employee Retirement 823 Employee Recruiting 824 Employee Training 825 Employee Taxes 830 Insurance 835 Taxes and Licenses 840 Office Supplies 841 Office Purchase 842 Office Rent 843 Office Utilities 844 Postage and Delivery 845 Janitorial and Cleaning 846 Telephone 850 Charitable Contributions 855 Dues and Memberships 860 Publications and Subscriptions 865 Legal and Professional Services. 870 Meals and Entertainment 875 Travel 880 Bank Fees 881 Interest Expense 885 Bad Debts 891 Unallocated Labor 892 Unallocated Materials 893 Warranty Expense 898 Miscellaneous 899 Overhead Charged to Jobs 910 Other Income 920 Other Expense 950 Income Tax Granite Construction Balance Sheet ASSETS CURRENT ASSETS Cash Accounts Receivable-Trade Accounts Receivable-Retention Inventory Costs and Profits in Excess of Billings Notes Receivable Prepaid Expenses Other Current Assets Total Current Assets. FIXED AND OTHER ASSETS Construction Equipment Trucks and Autos Office Equipment Total Fixed Assets Less Acc. Depreciation Net Fixed Assets Other Assets Total Assets Granite Construction Inc. 2015 Year LIABILITIES Current Liabilities Accounts Payable-Trade Accounts Payable-Retention Billings in Excess of Costs and Profits Notes Payable Accrued Payables Accrued Taxes Accrued Vacation Other Current Liabilities Total Current Liabilities Long-Term Liabilities Total Liabilities OWNER'S EQUITY Capital Stock Retained Earnings Current Period Net Income Total Equity Total Liabilities and Equity 32,387 74,526 6,888 0 9,177 3,139 735 3,114 129,966 39,229 8,981 8,057 56,267 46,562 9,705 45,996 185,667 38,682 3,768 1,424 4,022 4,574 2,718 606 6,605 62,399 61,544 123,943 10,000 51,724 0 61,724 185,667 2014 Year 34,826 38,212 4,235 0 4,549 0 1,061 1,119 84,002 39,229 8,981 8,057 56,267 39,889 16,378 50,462 150,842 35,772 3,536 2,022 5,791 2,254 2,405 308 5,330 57,418 48.916 106,334 10,000 34,508 0 44,508 150,842
