This is an advanced Accounting problem set. Please use the comparative balance sheets and income statement to answer the problem set.

2/16/2017 Data Table Sanfield Optical Mart Comparative Balance Sheets December 31, 2012 and 2011 2012 Current assets: Cash Current receivables, net 217,000 155,000 $ 138,000 Inventories 299,000 286,000 187,000 Prepaid expenses 6,000 24,000 563,000 509,000 Property, plant, and equipment, net 281,000 274,000 Total assets $ 844,000 $ 783,000 710,000 Accounts payable 120,000 108,000 Other current liabilties 144,000 189,000 Total current liabilities Longterm liabilities 243,000 235,000 Total liabilities 507,000 532,000 Common stockholders' equity, no par 337,000 251,000 194,000 Total liabilities and stockholders' equity $ 844,000 $ 783,000 $ Total current assets * Selected 2010 amounts. 2011 41,000 $ 2010* 44,000 $ 264,000 $ 297,000 120,000 https://www.mathxl.com/Student/PlayerHomework.aspx?homeworkId=407652722&questionId=2&flushed=false&cId=4297043&back=DoAssignments.aspx%3f... 1/1 2/16/2017 Data Table Sanfield Optical Mart Comparative Income Statements Years Ended December 31, 2012 and 2011 Net sales 2012 $ 2011 687,000 $ 592,000 Cost of goods sold 379,000 275,000 Gross profit 308,000 317,000 Operating expenses 130,000 143,000 Income from operations 178,000 174,000 Interest expense 33,000 46,000 Income before income tax 145,000 128,000 Income tax expense 40,000 53,000 Net income $ 105,000 $ 75,000 https://www.mathxl.com/Student/PlayerHomework.aspx?homeworkId=407652722&questionId=2&flushed=false&cId=4297043&back=DoAssignments.aspx%3f... 1/1 2/16/2017 Module 6 HomeworkNatalie Wagner Instructor: Suzanne Seymoure Course: Financial & Managerial Accting Assignment: Module 6 Homework MBA560MBOL1 Student: Natalie Wagner Date: 2/16/17 2. Comparative financial statement data of Sanfield Optical Mart follow: 1 2 (Click on the icon to view the income statements.) (Click on the icon to view the balance sheets.) Other information: 1. Market price of Sanfield common stock: $82.95 at December 31, 2012, and $66.15 at December 31, 2011 2. Common shares outstanding: 19,000 during 2012 and 17,000 during 2011 3. All sales on credit Read the requirements 3. Requirement 1. Compute the ratios for 2012 and 2011. (Abbreviations used: Avg = average and o/s = outstanding, shs shares.) a. Current ratio Select the formula and then enter the amounts to calculate the current ratio for 2012 and 2011. (Round the ratios to two decimal places.) (1) Current assets / (2) Current liabilities = Current ratio 2012 563000 / 264000 = 2.13 2011 509000 / 235000 = 2.17 b. Quick (acidtest) ratio Select the formula and then enter the amounts to calculate the quick (acidtest) ratio for 2012 and 2011. (Round the ratios to two decimal places.) ( (3) ) / (4) = Quick (acidtest) ratio 2012 ( ) / = 2011 ( ) / = c. Receivables turnover and days sales oustanding (DSO) (round to the nearest whole day) Begin by selecting the formula and then enter the amounts to calculate receivables turnover for 2012 and 2011. (Round the ratios to two decimal places.) (5) / (6) = Accounts receivable turnover 2012 / = 2011 / = Now select the formula and enter the amounts to calculate days sales oustanding (DSO) (round to the nearest whole day). (Use a 365day year.) (7) / (8) = Days sales outstanding (DSO) 2012 / = 2011 / = d. Inventory turnover and days inventory outanding (DIO) (round to the nearest whole day) Begin by selecting the formula and then enter the amounts to calculate the inventory turnover for 2012 and 2011. (Round the ratios to two decimal places.) https://xlitemprod.pearsoncmg.com/api/v1/print/accounting 1/10 2/16/2017 Module 6 HomeworkNatalie Wagner (9) / (10) = Inventory turnover 2012 / = 2011 / = Now select the formula and enter the amounts to calculate days inventory outanding (DIO) (round to the nearest whole day). (Use a 365day year.) (11) / (12) = Days' inventory outstanding (DIO) 2012 / = 2011 / = e. Accounts payable turnover and days payable outstanding (DPO) (round to the nearest whole day) Begin by selecting the formula and then enter the amounts to calculate the accounts payable turnover for 2012 and 2011. (Round the ratios to two decimal places.) (13) / (14) = Accounts payable turnover 2012 / = 2011 / = Now select the formula and enter the amounts to calculate days inventory outanding (DIO) (round to the nearest whole day). (Use a 365day year.) (15) / (16) = Days payable outstanding (DPO) 2012 / = 2011 / = f. Cash conversion cycle (in days) (17) + (18) (19) = Cash conversion cycle 2012 + = 2011 + = g. Timesinterestearned ratio Select the formula and then enter the amounts to calculate the timesinterestearned ratio for 2012 and 2011. (Round the ratios to two decimal places.) (20) / (21) = Timesinterestearned ratio 2012 / = 2011 / = h. Return on assets (use DuPont analysis) Select the formula and then enter the amounts to calculate the return on assets (ROA) for 2012 and 2011. (Round percentages to one decimal place, X.X%, and other component ratios to three decimal places, X.XXX.) (22) 2012 2011 x (23) = ROA % x = % % x = % i. Return on common stockholders' equity (use DuPont analysis) Select the formula and then enter the amounts to calculate the return on common stockholders' equity (ROE) for 2012 and 2011. (Round percentages to one decimal place, X.X% and other component ratios to three decimal places, X.XXX.) https://xlitemprod.pearsoncmg.com/api/v1/print/accounting 2/10 2/16/2017 Module 6 HomeworkNatalie Wagner (24) 2012 2011 x (25) = ROE % x = % % x = % j. Earnings per share of common stock Select the formula and then enter the amounts to calculate earnings per share (EPS) for 2012 and 2011. (For zero amounts, enter "0" in the appropriate cell. Round EPS to two decimal places.) ( (26) (27) ) / (28) = EPS 2012 ( ) / = 2011 ( ) / = k. Price/earnings ratio Select the formula and then enter the amounts to calculate the price/earnings (PE) ratio for 2012 and 2011. (Round the PE ratio to the nearest whole number.) (29) / (30) = PE ratio 2012 / = 2011 / = Requirement 2. a. Decide whether Sanfield's financial position improved or deteriorated during 2012. The company's financial position (31) during 2012 as shown by (32) in the (33) Requirement 2. b. Decide whether the investment attractiveness of Sanfield's common stock appears to have increased or decreased. The common stock's attractiveness (34) (36) during 2012, as shown by the (35) in the The price/earnings ratio (37) Requirement 3. How will what you learned in this problem help you evaluate an investment? This problem gives you practice in computing and evaluating several of the ratios used in (38) analyzing the twoyear trends in the ratios, you can see whether the company's abilities to (39) improved or deteriorated during this period. (40) and (41) By have ratio values generally indicate an attractive investment, ratio values usually signal an unattractive investment. 1: Data Table https://xlitemprod.pearsoncmg.com/api/v1/print/accounting 3/10 2/16/2017 Module 6 HomeworkNatalie Wagner Sanfield Optical Mart Comparative Income Statements Years Ended December 31, 2012 and 2011 2012 Net sales $ 2011 687,000 $ 592,000 Cost of goods sold 379,000 275,000 Gross profit 308,000 317,000 Operating expenses 130,000 143,000 Income from operations 178,000 174,000 Interest expense 33,000 46,000 Income before income tax 145,000 128,000 Income tax expense 40,000 53,000 Net income $ 105,000 $ 75,000 2: Data Table Sanfield Optical Mart Comparative Balance Sheets December 31, 2012 and 2011 2012 Current assets: Cash Current receivables, net 217,000 155,000 $ 138,000 Inventories 299,000 286,000 187,000 Prepaid expenses 6,000 24,000 563,000 509,000 Property, plant, and equipment, net 281,000 274,000 Total assets $ 844,000 $ 783,000 710,000 Accounts payable 120,000 108,000 Other current liabilties 144,000 189,000 Total current liabilities Longterm liabilities 243,000 235,000 Total liabilities 507,000 532,000 Common stockholders' equity, no par 337,000 251,000 194,000 Total liabilities and stockholders' equity $ 844,000 $ 783,000 $ Total current assets * Selected 2010 amounts. https://xlitemprod.pearsoncmg.com/api/v1/print/accounting 2011 41,000 $ 2010* 44,000 $ 264,000 $ 297,000 120,000 4/10 2/16/2017 Module 6 HomeworkNatalie Wagner 3: Requirements 1. Compute the following ratios for 2012 and 2011: a. Current ratio b. Quick (acidtest) ratio c. Receivables turnover and days sales oustanding (DSO) (round to the nearest whole day) d. Inventory turnover and days inventory outanding (DIO) (round to the nearest whole day) e. Accounts payable turnover and days payable outstanding (DPO) (round to the nearest whole day) f. Cash conversion cycle (in days) g. Timesinterestearned ratio h. Return on assets (use DuPont analysis) i. Return on common stockholders' equity (use DuPont analysis) j. Earnings per share of common stock g. Price/earnings ratio 2. Decide whether (a) Sanfield's financial position improved or deteriorated during 2012 and (b) the investment attractiveness of Sanfield's common stock appears to have increased or decreased. 3. How will what you learned in this problem help you evaluate an investment? (1) Avg common equity Avg inventory Avg receivables Interest expense Market price per share Net income Total quick assets Avg total assets Avg total liabilities Common shares o/s Cost of goods sold Current assets Current liabilities Earnings per share Income from operations (2) Avg common equity Avg inventory Avg receivables Interest expense Market price per share Net income Total quick assets Avg total assets Avg total liabilities Common shares o/s Cost of goods sold Current assets Current liabilities Earnings per share Income from operations (3) Cash + Inventory Cash + Inventory + Net current receivables Cash + Inventory + Prepaid expenses Cash + Shortterm investments + Net current receivables Cash + Shortterm investments + Prepaid expenses (4) Average inventory Average net receivables Current assets https://xlitemprod.pearsoncmg.com/api/v1/print/accounting Current liabilities Income from operations Interest expense Inventory Net current receivables Total assets Total liabilities 5/10 2/16/2017 Module 6 HomeworkNatalie Wagner (5) Average inventory Average net accounts receivables Cash Total assets Total liabilities Cost of goods sold Current assets Current liabilities Inventory Net accounts receivables Net credit sales One day's sales Shortterm investments (6) Average inventory Average net accounts receivables Cash Total assets Total liabilities Cost of goods sold Current assets Current liabilities Inventory Net accounts receivables Net credit sales One day's sales Shortterm investments (7) Accounts receivable turnover Average inventory Cash Quick (acidtest) ratio Total assets Total liabilities Cost of goods sold Current assets Current liabilities Current ratio Days in year Inventory Net credit sales Net accounts receivables (8) Accounts receivable turnover Average inventory Cash Quick (acidtest) ratio Total assets Total liabilities Cost of goods sold Current assets Current liabilities Current ratio Days in year Inventory Net credit sales Net accounts receivables (9) Avg common equity Avg inventory Avg receivables Interest expense Market price per share Net income Total quick assets (10) Avg common equity Avg inventory Avg receivables Interest expense Market price per share Net income Total quick assets Avg total assets Avg total liabilities Common shares o/s Cost of goods sold Avg total assets Avg total liabilities Common shares o/s Cost of goods sold https://xlitemprod.pearsoncmg.com/api/v1/print/accounting Current assets Current liabilities Earnings per share Income from operations Current assets Current liabilities Earnings per share Income from operations 6/10 2/16/2017 Module 6 HomeworkNatalie Wagner (11) Accounts payable turnover Average inventory Average net receivables Cash Cost of goods sold Current assets Current liabilities Days in year Inventory Inventory turnover Net credit sales Net receivables Total assets Total liabilities (12) Accounts payable turnover Average inventory Average net receivables Cash Cost of goods sold Current assets Current liabilities Days in year Inventory Inventory turnover Net credit sales Net receivables Total assets Total liabilities (13) Average accounts payable Average inventory Average net receivables Shortterm investments Total assets Total liabilities Cash Cost of goods sold Current assets Current liabilities Inventory Net credit sales Net receivables One day's sales (14) Cash Cost of goods sold Current assets Current liabilities Inventory Net credit sales Net receivables One day's sales Average accounts payable Average inventory Average net receivables Shortterm investments Total assets Total liabilities (15) Cash Accounts payable turnover Cost of goods sold Average inventory Current assets Average net receivables Current liabilities Net receivables Total liabilities One day's sales Shortterm investments Total assets Days in year Inventory Inventory turnover Net credit sales (16) Days in year Inventory Inventory turnover Net credit sales Cash Accounts payable turnover Cost of goods sold Average inventory Current assets Average net receivables Current liabilities Net receivables Total liabilities One day's sales Shortterm investments Total assets https://xlitemprod.pearsoncmg.com/api/v1/print/accounting 7/10 2/16/2017 Module 6 HomeworkNatalie Wagner (17) Avg inventory Avg net receivables Cash Total assets Total liabilities Cost of goods sold Current assets Current liabilities Days in year DIO DPO DSO Inventory turnover Net credit sales Net receivables One day's sales ST investments (18) Cost of goods sold Current assets Current liabilities Days in year DIO DPO DSO Inventory turnover Net credit sales Net receivables One day's sales ST investments (19) Cost of goods sold Current assets Current liabilities Days in year DIO DPO DSO Inventory turnover Net credit sales Net receivables One day's sales ST investments (20) Avg total assets Avg total liabilities Common shares o/s Cost of goods sold Current assets Current liabilities Earnings per share Income from operations (21) Avg total assets Avg total liabilities Common shares o/s Cost of goods sold Current assets Current liabilities Earnings per share Income from operations Avg inventory Avg net receivables Cash Total assets Total liabilities Avg inventory Avg net receivables Cash Total assets Total liabilities Avg common equity Avg inventory Avg receivables Interest expense Market price per share Net income Total quick assets Avg common equity Avg inventory Avg receivables Interest expense Market price per share Net income Total quick assets (22) Debt ratio Rate of return on net sales Return on equity (25) Asset turnover Earnings per share Leverage ratio https://xlitemprod.pearsoncmg.com/api/v1/print/accounting (23) Asset turnover Earnings per share Leverage ratio (24) Debt ratio Rate of return on sales Return on assets 8/10 2/16/2017 Module 6 HomeworkNatalie Wagner (26) Avg receivables Avg common equity Avg total assets Avg inventory Avg total liabilities Avg. number common shs o/s Cost of goods sold Interest expense Total quick assets Market price per share Net income Preferred dividends Current assets Current liabilities Earnings per share Income from operations (27) Current assets Current liabilities Earnings per share Income from operations (28) Current assets Current liabilities Earnings per share Income from operations Avg receivables Avg common equity Avg total assets Avg inventory Avg total liabilities Avg. number common shs o/s Cost of goods sold Interest expense Total quick assets Market price per share Net income Preferred dividends Avg receivables Avg common equity Avg total assets Avg inventory Avg total liabilities Avg. number common shs o/s Cost of goods sold Interest expense Total quick assets Market price per share Net income Preferred dividends (29) Avg total assets Current assets Avg common equity Avg total liabilities Current liabilities Avg inventory Common shares o/s Earnings per share Avg receivables Cost of goods sold Income from operations Interest expense Total quick assets Market price per share of common stock Net income Preferred dividends (30) Avg total assets Current assets Avg common equity Avg total liabilities Current liabilities Avg inventory Common shares o/s Earnings per share Avg receivables Cost of goods sold Income from operations Interest expense Total quick assets Market price per share of common stock Net income Preferred dividends (31) improved deteriorated (32) decrease increase https://xlitemprod.pearsoncmg.com/api/v1/print/accounting 9/10 2/16/2017 Module 6 HomeworkNatalie Wagner (33) current ratio, inventory turnover, and timesinterestearned ratio. market price per share. return on assets, return on equity, and earnings per share. (35) increase decrease (37) decreased slightly. increased slightly. stayed the same. (39) acquire assets, raise capital, and pay dividends pay its debts, sell its inventory, and generate profits (36) (34) increased decreased current ratio, inventory turnover, and timesinterestearned ratio. market price per share, return on assets, return on equity, and earnings per share. (38) https://xlitemprod.pearsoncmg.com/api/v1/print/accounting financial statement preparation. investment analysis. (40) Deteriorating Improving (41) deteriorating improving 10/10