Question 32

Balance sheet

Cash $41,000 $21,000

Account receivable (net) 38,000 31,000

Inventory 99,000 40,000

Property & equipment 140,000 401,000

Other assets 84,000 305,000

Total assets $402,000 $798,000

Current liabilities $ 99,000 $49,000

Long term debt (interest rate: 10%) 65,000 60,000

Capital stock ($10 per value) 148,000 512,000

Additional paid in capital 29,000 106,000

Retainined earning 61,000 71,000

Total liabilities and stockholders equity $402,000 $798,000

Income Statement

Sales revenue (1/3 on credit) $447,000 $802,000

Cost of goods sold (241,000 (400,000)

Operating expense (161,000) (311,000)

Net income $45,000 $91,000

Other data:

Per-share stock price at end of current year $22 $15

Average income tax rate 30% 30%

Dividends declared and paid in current year $33,000 $148,000

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 its president has said, We avoid what we consider to be undue risk Neither company is publicly held.

Requirement

1. Complete a schedule that reflect a ration analysis of each company (Round your intermediate calculation and final answer 2 decimal place. Enter percentage answers rounded 2 decimal place.

Ration Blue Water Company Prime Fish Company

Profitability ratio

1. Return on equity 18.91 13.21
2. Return on assets 11.91 11.40
3. Gross profit percentage ? ?
4. Net Profit Margins 10.07 11.35
5. Earnings per share 3.04 1.78
6. Quality Of Income ? ?

Quality of income

Turnover ratio

Solvency ratios

Times Interest Earned Ratio ? ?

Cash Coverage Ratio ? ?