1 Income statement. In an accounting conference, discussion turned to the possIbinty of pre paring financial statemen ts from a few key accounts, together with financial or cost ratios. The assistant controller of a participating firm provided the following data: pretax income for the year, $1,200,000; pretax income rate on sales. 10%: gross profit rate, 40%; rate of marketing expenses to sales, 15%; 5% bonds payable represent 37.5% of the total liabilities of $2,000,000. Bequired: An income statement for the vear based on the above information.

1 Income statement. In an accounting conference, discussion turned to the possIbinty of pre paring financial statemen ts from a few key accounts, together with financial or cost ratios. The assistant controller of a participating firm provided the following data: pretax income for the year, $1,200,000; pretax income rate on sales. 10%: gross profit rate, 40%; rate of marketing expenses to sales, 15%; 5% bonds payable represent 37.5% of the total liabilities of $2,000,000. Bequired: An income statement for the vear based on the above information.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ratio Analysis Presented below are summary financial data from Pompeo’s annual report: Amounts in millions Balance sheet Cash and cash equivalents $2,712 Marketable securities 27,128 Accounts receivable (net) 14,051 Total current assets 58,632 Total assets 184,617 Current liabilities 66,017 Long-term debt 12,738 Shareholders’ equity 119,487 Income Statement Interest expense 539 Net income before taxes 24,512 Calculate the following ratios: (round to two decimal places) a. Times-interest-earned ratio b. Quick ratio c. Current ratio
The financial statements of Dandy Distributors Ltd. are shown on the "Fcl. Stmts." page. 1 Based on Dandy's financial statements, calculate ratios for the year ended December 31, 2020. Assume all sales are on credit. Show your work. 2 From these ratios, analyze the financial performance of Dandy.
Based on the ratios below, which of the two companies is most liquid? Assume that both companies have approached you seeking a six-month (short-term) loan in the amount of 30% of the respective company’s current assets. You have but one loan to give. To which company do you grant the loan? Please discuss each ratio. COMPANY 1(Data from left to right: 2018, 2019) Accounts receivable turnover =Net Credit Sales/ Average Debtors =6643051 / 58752 =113.07 =6084766 / 71649 =84.92 Average Days to collect= 365 / Accounts receivable turnover =365 / 113.07= 3.22 365 / 84.92= 4.29 Inventory Turnover= COGS / Average Inventory = 3868119 / 954183 =4.05 =3559158 / 752562 =4.73 Average Inventory Period= 365 / Inventory Turnover = 365 / 4.05= 90.12 365 / 4.73 = 77.16 Company 2(Data years from left to right: 2018, 2019, 2020) Accounts Receivable turnover Ratio = ( Net Credit sales / Average Accounts receivable ) From table A (5/7) 184.15 143.98 129.22 Avg Days to…
Examine the selected data over the 5-year period as shown in the table below for Dumbledore Ltd. Item Sales Cost of sales EBIT Interest NPAT Current assets Total assets current liabilities Total liabilities Equity Gross margin Interest coverage Current ratio 2021 $m 286.41 180.03 51.18 37.07 35.13 43.85 226.18 55.99 98.99 127.19 0.37 1.38 0.78 Year 2020 $m 280.80 166.69 51.08 33.70 35.10 43.20 221.75 53.58 91.66 130.09 0.41 1.52 0.81 2019 $m 275.29 154.35 50.98 30.64 35.06 42.56 217.40 51.27 84.87 132.53 0.44 1.66 0.89 2018 $m 269.89 142.91 50.88 27.85 35.03 41.93 213.13 49.06 78.58 134.56 0.47 1.83 U.OJ 2017 $m 264.60 134.19 49.88 25.32 34.51 41.31 206.93 47.40 74.48 132.44 0.49 1.97 0.87 2016 $m 252.00 126.00 48.90 24.00 34.00 40.70 200.90 45.80 70.60 130.30 0.50 2.04 0.89
JBC Inc. has the following information reported by its chief accountant for the current year: Sales Operating income Total assets Current liabilities Target rate of return Corporate tax rate WACC $4,500,000 $505,000 $2,500,000 $150,000 18% 35% 13% How much is stakeholders' expected return in dollars? O a) $55,500 O b) $22,750 c) $305,500 d) $305,500
Cash Balance Sheet Marketable securities Account receivable Inventory Prepaid rent Total current assets Net Plant and equipment Total assets Account payable Notes payable Accruals Total current liabilities Long-term debt Common stockholders' equity Total liabilities and stockholders' equity Sales Less; Cost of goods sold Gross profit Less: General and administrative Less: Interest Less: Depreciation Total operating and interest expense Earning before tax Less: tax Net income Less: cash dividend Change in retained earnings James Company 2015 15,000 6,000 42,000 51,000 1,200 115,200 286,000 401,200 48,000 15,000 6,000 69,000 160,000 172,200 401,200 2016 14,000 6,200 33,000 84,000 1,100 138,000 270,000 408,300 57,000 13,000 5,000 75,000 150,000 183,300 408,300 600.00 460.000 140.000 30.000 10.000 30.000 70.000 70.000 27.100 42.900 31.800 11.100
Clayton Industries has the following account balances: Current assets Noncurrent assets The company wishes to raise $45,000 in cash and is considering two financing options: Clayton can sell $45,000 of bonds payable, or it can issue additional common stock for $45,000. To help in the decision process, Clayton's management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required a-1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. Currently If bonds are issued If stock is issued $ 22,000 Current liabilities 77,880 Noncurrent liabilities stockholders' equity Currently If bonds are issued If stock is issued Current Ratio 2.44 to 1 a-2. Compute the debt-to-assets ratio for Clayton's management. Note: Round your answers to 1 decimal place. Bonds Stock to 1 to 1 Debt to Assets Ratio Additional Retained Earnings $ 9,000 50,000 48,888 % % % b. Assume that after the funds are invested, EBIT…
Bankruptcy Risk and Z-Score Analysis Following are selected ratios for Tesla for two recent fiscal years. Note: Complete the entire question in Excel and format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places. Ratio Current ratio Working capital to total assets Retained earnings to total assets EBIT to total assets EBITDA to total assets Market value of equity to total liabilities Sales to total assets Compute and interpret Altman Z-scores for the company for both years. Year Z-score 2017 2018 2018 2017 1.135 0.831 0.642 0.5430 (0.177) (0.1788) (0.002) (0.0549) 0.061 0.0527 3.490 2.8830 1.316 0.9950 0 0 Check Is the company's bankruptcy risk increasing or decreasing over this period? Increasing Decreasing ◆
Pribyl Corporation has provided the following financial data: Total assets Total stockholders' equity Income Statement For the Year Ended December 31, Year 2 $ Sales (all on account) Cost of goods sold Gross margin Operating expenses Net operating income Interest expense Net income before taxes Income taxes (36%) Net income a. Net profit margin percentage b. Gross margin percentage c. Return on total assets d. Return on equity % 1,285,000 727,000 558,000 510,846 Required: a. What is the company's net profit margin percentage for Year 2? b. What is the company's gross margin percentage for Year 2? c. What is the company's return on total assets for Year 2? d. What is the company's return on equity for Year 2? Note: Round your answers to 2 decimal places. % % 47,154 17,500 29,654 10.675 $ 18,979 $ 1.496.000 $ 1,033,000 $ 1,470,000 $ 1,020,000
Ratio Analysis Presented below are summary financial data from Pompeo's annual report: Amounts in millions Balance sheet Cash and cash equivalents $6,328 Marketable securities 63,298 Accounts receivable (net) 32,785 Total current assets 136,808 Total assets 430,773 Current liabilities 113,172 Long-term debt 21,837 Shareholders' equity 204,834 Income Statement Interest expense 1,257 Net income before taxes 42,021 Calculate the following ratios: (round to two decimal places) a. Times-interest-earned ratio b. Quick ratio
You are considering two possible companies for investment purposes. The following data is available for each company. Company A Net credit sales, Dec. 31, 2019 $540,000 Net Accounts receivable, Dec 31, 2018 $120,000 Net accounts receivable, Dec 31, 2019 $180,000 Number of days sales in receivables ratio, 2018 103 days Net Income, Dec. 31, 2018 $250,000 Company B Net credit sales, Dec. 31, 2019 $620,000 Net Accounts receivable, Dec 31, 2018 $145,000 Net accounts receivable, Dec 31, 2019 $175,000 Number of days sales in receivables ratio, 2018 110 days Net Income, Dec. 31, 2018 $350,000 Additional Information: Company A: Bad debt estimation percentage using the income statement method is 6%, and the balance sheet…
Paddy's Pub reported the following year-end data: Income before interest expense and income tax expense Cost of goods sold Interest expense Total assets Total liabilities Total equity Compute the (a) debt-to-equity ratio and (b) times Interest earned. Complete this question by entering your answers in the tabs below. Debt To Equity Times Interest Ratio Earned Compute the debt-to-equity ratio. Numerator: 1 1 Debt-To-Equity Ratio Denominator: II