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# Fianacial analysis

Problem 17-1A Ratios, common-size statements, and trend percents L.O. P1, P2, P3

[The following information applies to the questions displayed below.]

 Selected comparative financial statements of Bennington Company follow:

 BENNINGTON COMPANY Comparative Income Statements For Years Ended December 31, 2012, 2011, and 2010 2012 2011 2010 Sales \$ 457,083 \$ 350,163 \$ 243,000 Cost of goods sold 275,164 219,202 155,520 Gross profit 181,919 130,961 87,480 Selling expenses 64,906 48,322 32,076 Administrative expenses 41,137 30,814 20,169 Total expenses 106,043 79,136 52,245 Income before taxes 75,876 51,825 35,235 Income taxes 14,113 10,624 7,153 Net income \$ 61,763 \$ 41,201 \$ 28,082

 BENNINGTON COMPANY Comparative Balance Sheets December 31, 2012, 2011, and 2010 2012 2011 2010 Assets Current assets \$ 47,321 \$ 37,023 \$ 49,491 Long-term investments 0 1,200 3,960 Plant assets, net 85,231 90,490 53,188 Total assets \$ 132,552 \$ 128,713 \$ 106,639 Liabilities and Equity Current liabilities \$ 19,353 \$ 19,178 \$ 18,662 Common stock 71,000 71,000 53,000 Other paid-in capital 8,875 8,875 5,889 Retained earnings 33,324 29,660 29,088 Total liabilities and equity \$ 132,552 \$ 128,713 \$ 106,639

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Problem 17-1A Part 1

 Required: 1. Compute each year’s current ratio. (Round your answers to 1 decimal place.)
 Current ratio December 31, 2012: to Current ratio December 31, 2011: to Current ratio December 31, 2010: to

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Problem 17-1A Part 2

 2 Express the income statement data in common-size percents. (Percents are rounded to two decimals and thus may not exactly sum to totals and subtotals. Round your answers to 2 decimal places. Omit the “%” sign in your response.)
 BENNINGTON COMPANY Common-Size Comparative Income Statements For Years Ended December 31, 2012, 2011, and 2010 2012 2011 2010 Sales % % % Cost of goods sold Gross profit Selling expenses Administrative expenses Total expenses Income before taxes Income taxes Net income % % %

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Problem 17-1A Part 3

 3 Express the balance sheet data in trend percents with 2010 as the base year. (Round your answers to 2 decimal places. Leave no cells blank – be certain to enter “0” wherever required. Omit the “%” sign in your response.)
 BENNINGTON COMPANY Balance Sheet Data in Trend Percents December 31, 2012, 2011, and 2010 2012 2011 2010 Assets Current assets % % % Long-term investments Plant assets Total assets Liabilities and Equity Current liabilities % % % Common stock Other contributed capital Retained earnings Total liabilities and equity

Problem 17-4A Calculation of financial statement ratios L.O. P3

 Selected year-end financial statements of McCord Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2010, were inventory, \$53,900; total assets, \$229,400; common stock, \$95,000; and retained earnings, \$52,348.)

 McCORD CORPORATION Income Statement For Year Ended December 31, 2011 Sales \$ 450,600 Cost of goods sold 297,450 Gross profit 153,150 Operating expenses 99,500 Interest expense 3,900 Income before taxes 49,750 Income taxes 20,041 Net income \$ 29,709

 McCORD CORPORATION Balance Sheet December 31, 2011 Assets Liabilities and Equity Cash \$ 16,000 Accounts payable \$ 16,500 Short-term investments 8,800 Accrued wages payable 4,800 Accounts receivable, net 31,400 Income taxes payable 3,300 Notes receivable (trade)* 4,000 Long-term note payable, secured Merchandise inventory 32,150 by mortgage on plant assets 65,400 Prepaid expenses 3,050 Common stock 95,000 Plant assets, net 153,300 Retained earnings 63,700 Total assets \$ 248,700 Total liabilities and equity \$ 248,700

 * These are short-term notes receivable arising from customer (trade) sales.

 Required: Compute the following. (Use 365 days a year. Do not round intermediate calculations and round your final answers to 1 decimal place. Omit the “%” sign in your response):

 (1) Current ratio to (2) Acid-test ratio to (3) Days’ sales uncollected (including note) days (4) Inventory turnover times (5) Days’ sales in inventory days (6) Debt-to-equity ratio to (7) Times interest earned times (8) Profit margin ratio % (9) Total asset turnover times (10) Return on total assets % (11) Return on common stockholders’ equity %

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