Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The financial statements for the years 20x3 and 20x4 appear below. Gordan Corporation Balance Sheets December 31 20X4 20X3 ASSETS Current Assets: Cash $330 $360
The financial statements for the years 20x3 and 20x4 appear below. | |||||||||
Gordan Corporation | |||||||||
Balance Sheets | |||||||||
December 31 | |||||||||
20X4 | 20X3 | ||||||||
ASSETS | |||||||||
Current Assets: | |||||||||
Cash | $330 | $360 | |||||||
Accounts Receivable (net) | 470 | 433 | |||||||
Inventory | 430 | 390 | |||||||
Prepaid Expenses | 120 | 160 | |||||||
Total Current Assets | $1,350 | $1,343 | |||||||
Property, Plant and Equipment | 420 | 380 | |||||||
Long-Term Investments | 10 | 10 | |||||||
Intangible Assets | 530 | 510 | |||||||
Total Assets | $2,310 | $2,243 | |||||||
LIABILITIES | |||||||||
Current Liabilities: | |||||||||
Accounts Payable | $500 | $410 | |||||||
Accrued Expenses | 200 | 50 | |||||||
Notes Payable: Short-Term | 200 | 350 | |||||||
Total Current Liabilities | $900 | $810 | |||||||
Long-Term Liabilites | 390 | 393 | |||||||
Total Liabilities | $1,290 | $1,203 | |||||||
STOCKHOLDERS' EQUITY | |||||||||
Common Stock | $220 | $220 | |||||||
Retained Earnings | $800 | $820 | |||||||
Total Stockholders' Equity | $1,020 | $1,040 | |||||||
Total Liabilities and Stockholders' Equity | $2,310 | $2,243 | |||||||
Gordan Corporation | |||||||||
Income Statements | |||||||||
For the Years Ended December 31 | |||||||||
20X4 | 20X3 | ||||||||
Net Sales (all on credit) | $4,000 | $3,600 | |||||||
Less: Cost of Goods Sold | -984 | -895 | |||||||
Gross Profit | $3,016 | $2,705 | |||||||
Operating Expenses: | |||||||||
Selling Expenses | 1400 | 1330 | |||||||
General and Administrative Expenses | 1252 | 1162 | |||||||
Total Operating Expenses | $2,652 | $2,492 | |||||||
Net Income | $364 | $213 | |||||||
REQUIRED: | |||||||||
1. Compute the ratios below (a through j) for the years 20X3 and 20X4. | |||||||||
SHOW THE ENTIRE FORMULA FOR EACH RATIO | |||||||||
ROUND EACH RATIO TO TWO DECIMAL PLACES | |||||||||
IDENTIFY WHICH YEAR HAS THE BETTER RATIO, 20X3 OR 20X4 | |||||||||
EXAMPLE: | |||||||||
a. YEAR 2003: DEBT RATIO = $1,203/$2,243 = .54 | BETTER | ||||||||
YEAR 2004: DEBT RATIO = $1,290/$2,310 = .56 | |||||||||
a. Current Ratio | |||||||||
b. Acid-Test Ratio | |||||||||
c. Inventory Turnover (Inventory for 20X2 was $350) | |||||||||
d. Days'Sales in Inventory | |||||||||
e. Accounts Receivable Turnover (Accounts Receivable for 20X2 was $390) | |||||||||
f. Rate of Return on Common Stockholders' Equity (Common Stockholders' Equity for 20X2 was $990) | |||||||||
g. Debt to Equity Ratio | |||||||||
h. Profit Margin Ratio | |||||||||
i. Rate of Return on Total Assets (Total Assets for 20X2 was $2,100) | |||||||||
j. Asset Turnover Ratio (Total Assets for 20X2 was $2,100) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started