financial analsis

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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














.mhecloud.mcgraw-hill.com/”>references

1.

value:

1.00 points

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


eBook Links (3).mhecloud.mcgraw-hill.com/”>references

2.

value:

1.00 points

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

%

%

%








eBook Links (3).mhecloud.mcgraw-hill.com/”>references

3.

value:

1.00 points

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








eBook Links (3).mhecloud.mcgraw-hill.com/”>references

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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