1. Using the financial statements above, prepare a common size income statement and balance sheet.2. Using the financial statements above, prepare a trend analysis of the the income statement and balance sheet.3. Using the financial statement above, find the following ratios for both 2017 and 2018.Current RatioQuick RatioInventory Turnover RatioTimes Interest EarnedDebt RatioEquity RatioNet Profit MarginGross Profit MarginFixed Asset TurnoverTotal Asset Turnover Income Statement20162017Sales15,000,000 20,000,0006,000,000 11,000,0003,000,000 3,500,000| 2,000,000 2,500,000COGSS&A ExpensesDepreciationEBIT (Operating Income) 4,000,000 3,000,000Taxes (30%)900,000450,000Net Income| 2,100,000 1,050,000| 2,000,000 2,000,000Number of SharesEPS$1.05$0.525Dividends per Share$0.50$0.50Stock Price$25.00$17.50 Balance Sheet20162017Cash3,000,0003.,050,000A/R2,000,0004,000,000Iv.2,000,0004,000,00011,050,000Cur. Assets7,000,000Net Prop, Plant & Equip10,000,00011,000,000Total Assets17,000,00022,050,0003,500,0002,000,000| 1,500,000A/P2,500,000Accruals1,500,000Notes Payable500,000Cur. Liabilities4,500,0007,000,000Long-Term Debt5,500,0008,000,000Total Liabilities10,000,00015,000,000Common Stock1,000,0001,000,000Retained Earnings6,000,0006,050,000Owners Equity7,000,0007,050,000Tot. Liab. & O.E.17,000,00022,050,000

Financial analysis is the process of assessing a company's performance in relation to its industry…

Answered: 1. Using the financial statements…

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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1. Using the financial statements above, prepare a common size income statement and balance sheet.

2. Using the financial statements above, prepare a trend analysis of the the income statement and balance sheet.

3. Using the financial statement above, find the following ratios for both 2017 and 2018.

Current Ratio
Quick Ratio
Inventory Turnover Ratio
Times Interest Earned
Debt Ratio
Equity Ratio
Net Profit Margin
Gross Profit Margin
Fixed Asset Turnover

Total Asset Turnover

Income Statement
2016
2017
Sales
15,000,000 20,000,000
6,000,000 11,000,000
3,000,000 3,500,000
| 2,000,000 2,500,000
COGS
S&A Expenses
Depreciation
EBIT (Operating Income) 4,000,000 3,000,000
Taxes (30%)
900,000
450,000
Net Income
| 2,100,000 1,050,000
| 2,000,000 2,000,000
Number of Shares
EPS
$1.05
$0.525
Dividends per Share
$0.50
$0.50
Stock Price
$25.00
$17.50

Balance Sheet
2016
2017
Cash
3,000,000
3.,050,000
A/R
2,000,000
4,000,000
Iv.
2,000,000
4,000,000
11,050,000
Cur. Assets
7,000,000
Net Prop, Plant & Equip
10,000,000
11,000,000
Total Assets
17,000,000
22,050,000
3,500,000
2,000,000
| 1,500,000
A/P
2,500,000
Accruals
1,500,000
Notes Payable
500,000
Cur. Liabilities
4,500,000
7,000,000
Long-Term Debt
5,500,000
8,000,000
Total Liabilities
10,000,000
15,000,000
Common Stock
1,000,000
1,000,000
Retained Earnings
6,000,000
6,050,000
Owners Equity
7,000,000
7,050,000
Tot. Liab. & O.E.
17,000,000
22,050,000

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