Question
Use Oppong Corporation's financial statements to compute the required ratios below, and indicate whether the change from year to year is favourable or unfavourable. For
Use Oppong Corporation's financial statements to compute the required ratios below, and indicate whether the change from year to year is favourable or unfavourable. For your analysis, assume that all other things have remained constant. Apply your analysis in very general terms.
All values should be accurate to at least two decimal places.
Oppong CorporationIncome StatementFor Years Ended December 31, 2014, 2013, and 2012
20142013201 2
Sales$1,102,100$924,200$863,000
Cost of goods sold722,600633,300570,300
Gross profit from sales379,500290,900292,700
Operating expenses198,900174,700148,100
Income from operations180,600116,200144,600
Interest expense 2,5502,4002,300
Income before taxes178,050113,800142,300
Income taxes25,50020,00035,100
Net income$152,550$93,800$107,200
Oppong CorporationBalance SheetDecember 31, 2014, 2013, and 2012
Assets201420132012
Cash$44,900$50,500$46,500
Short-term investments 67,00073,00075,000
Accounts receivable, net52,40050,10044,300
Merchandise inventory23,40025,10030,800
Prepaid expenses 6,2005,7005,500
Notes receivable, due in 20177,5007,0007,000
Plant assets, net317,000377,000433,000
Total assets$518,400$588,400$642,100
Liabilities and Equity
Accounts payable $49,300$45,700$46,700
Salaries payable12,20011,00011,000
Income taxes payable10,3509,60011,000
Long-term note payable secured by mortgage on plant assets 83,00076,00077,000
Share capital, 200,000 shares140,000150,000170,000
Retained earnings 223,550296,100326,400
Total liabilities and equity$518,400$588,400 $642,100
RatioAnalysis
20142013 Analysis
Times interest earned ratio()
Current ratio
Number of days of sales in inventory
Net profit ratio (%)
Return on equity (%)
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