Question
Thor Company Gunnar Company Balance Sheet Cash $ 36,000 $ 33,000 Accounts Receivable, Net 78,000 29,000 Inventory 156,000 32,000 Equipment, Net 772,000 194,000 Other Assets
Thor Company | Gunnar Company | ||||||
Balance Sheet | |||||||
Cash | $ | 36,000 | $ | 33,000 | |||
Accounts Receivable, Net | 78,000 | 29,000 | |||||
Inventory | 156,000 | 32,000 | |||||
Equipment, Net | 772,000 | 194,000 | |||||
Other Assets | 197,000 | 69,400 | |||||
Total Assets | $ | 1,239,000 | $ | 357,400 | |||
Current Liabilities | $ | 170,000 | $ | 20,000 | |||
Note Payable (long-term) (12% interest rate) | 268,000 | 68,000 | |||||
Common Stock (par $20) | 673,000 | 253,000 | |||||
Additional Paid-in Capital | 71,000 | 5,800 | |||||
Retained Earnings | 57,000 | 10,600 | |||||
Total Liabilities and Stockholders Equity | $ | 1,239,000 | $ | 357,400 | |||
Income Statement | |||||||
Sales Revenue | $ | 1,123,000 | $ | 339,000 | |||
Cost of Goods Sold | 673,000 | 181,000 | |||||
Other Expenses | 337,000 | 115,000 | |||||
Net Income | $ | 113,000 | $ | 43,000 | |||
Other Data | |||||||
Per share price at end of year | $ | 12.00 | $ | 30.00 | |||
Selected Data from Previous Year | |||||||
Accounts Receivable, Net | $ | 66,800 | $ | 28,200 | |||
Inventory | 134,000 | 46,600 | |||||
Equipment, Net | 772,000 | 194,000 | |||||
Note Payable (long-term) (12% interest rate) | 268,000 | 68,000 | |||||
Total Stockholders Equity | 801,000 | 269,400 | |||||
These two companies are in the same business and state but different cities. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Thor Company wants to borrow $106,000 and Gunnar Company is asking for $37,000. The loans will be for a two-year period. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the years average and all sales are on account.
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Thor Company Gunnar Company 12. 10.06% 40.07 % 12.68% 46.61% % $ 3.36 3.57 Ratio Tests of Profitability: 1. Net Profit Margin 2. Gross Profit Percentage 3. Fixed Asset Turnover Return on Equity 5. Earnings per Share 6. Price/Earnings Ratio Tests of Liquidity: 7. Receivables Turnover Days to Collect 8. Inventory Turnover Days to Sell 9. Current Ratio Tests of Solvency: 10. Debt-to-Assets Ratio days days days days
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