question 35

2013 15 30 75 10 130 500 100 400 530 Comparative Balance Sheet Call Accounts receivable Inventory dins Fatal current Ferty and equipment Accurated depreciation Tostal property and equipment Total Accounts payable Other current abilities Total current liabilities Bonds payable Total abilities Common stock Retained earings Total stockholders' equity Total liabilities and stockholders' equity 2012 7 10 25 75 15 125 400 85 315 1440 Amanda's Anchors Income Statement For the Year Ending December 31, 2013 (in millions) Sales 260 Cost of goods sold 35 Gross profit 125 Operating expenses 10 Operating income 815 interest expense 2.5 income before taxes 212.5 income tax expense Net income 16 65 + 50 40 90 7.40 25 65 75 140 290 100 390 150 240 150 50 200 1530 440 Amanda's Anchors Balance Sheet December 31, December 31, 2013 2012 Cash 7 7.5 760 Accounts recewable 0.3 2 Inventory 2 Prepaid insurance 0.5 0.5 Total current assets 14 10.5 Property and equipment 50 55 Accumulated depreciation 11 Total property and equipment 46 44 Total assets 0545 210 Income Statement 2013 Sales 6400 Cost of goods sold Gross profit 2190 Operating expenses 55 Operating income 2135 Interest expense 15 Income before taxes 3120 Income tax expense 50 Net income 70 Required Calculate all profitability, liquidity, and solvency ratios (except earnings per share, price to earnings and debt to equity) and comment on Last Chance's overall profitability, liquidity, and solvency, Round percentages to one decimal point (le, 12.8%). 35. Analyzing Financial Statements Amanda's Anchors has applied for a loan from a local bank. The bank is basing its decision on the following information Katie Industry Average 1.50 Current ratio 0.80 Quick tatlu 18.00 Receivables turnover ratio 20.00 Inventory tumover ratio Debt to assets ratio Times Interest earned Accounts payable 6 Other current liabilities 4 45 Total current liabilities 10 105 Bonds payable 15 15 Total abilities 25 25.5 Common stock 25 25 Retained earings 10 10 Total stockholders' equity 29 Total bilities and stockholders' equity 360 1545 Required For Amanda's Anchors, calculate the ratios for which the bank has an industry average. After comparing Amanda's ratios to the industry averages, should the bank approve the loan? Why or why not? TE 36. Using Hatias te Evaluate a Business Purchase Overtake Financial Group is a large corporation whose sole activity is the acquisition of quality subsidiary companies. You are a senior analyst for Overtake, and your manager has just come to you with the following financial statements for Burning Com Company, an ethanol producing firm based in Nebraska, which is currently trading at 500 per share. He wants you to analyze the company and give a recommendation on whether or not to sub mit a bid for Burning Com 0.56 6.52 on margin 10.25% 11.505 20305 elu on assets Return on equity 349