1. Using year-end balances for all ratios, compute the t
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Balance Sheet & Income Statement Analysis for Blue Water Company & Prime Fish Company**
The current year financial statements for Blue Water Company and Prime Fish Company are presented below.
### Balance Sheets:
- **Assets:**
- Cash: BWC $41,000 | PFC $25,000
- Accounts receivable (net): BWC $8,000 | PFC $7,500
- Inventory: BWC $30,500 | PFC $48,400
- Property, plant & equipment (net): BWC $70,000 | PFC $95,000
- Other: BWC $43,500 | PFC $35,000
- **Total Assets:** BWC $193,000 | PFC $210,900
- **Liabilities:**
- Current debt: BWC $5,200 | PFC $15,400
- Long-term debt (interest rate 10%): BWC $60,000 | PFC $70,000
- Common stock ($10 par value): BWC $36,000 | PFC $40,000
- Paid-in capital in excess of par: BWC $13,000 | PFC $16,000
- Retained earnings: BWC $78,800 | PFC $69,500
- **Total Liabilities and Stockholders' Equity:** BWC $193,000 | PFC $210,900
### Income Statements:
- **Revenue and Expenses:**
- Sales revenue (1/3 on credit): BWC $447,000 | PFC $689,000
- Cost of goods sold: BWC $190,000 | PFC $468,000
- Operating expenses: BWC $167,000 | PFC $182,000
- Other: BWC $57,000 | PFC $16,000
- **Net Income:** BWC $45,000 | PFC $23,000
### Market Data:
- Average stock price at end of current year: BWC $30 | PFC $30
- Income tax rate: BWC 30% | PFC 30%
- Dividends declared and paid in current year: BWC $1.20 | PFC $0.60
Both companies are in the fish catching and manufacturing business. They](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F18d7602f-9f25-445c-bda8-4d38e99e2d82%2F4f23a705-aa3b-4563-82f4-ca24ec52b565%2F93d5m2h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Balance Sheet & Income Statement Analysis for Blue Water Company & Prime Fish Company**
The current year financial statements for Blue Water Company and Prime Fish Company are presented below.
### Balance Sheets:
- **Assets:**
- Cash: BWC $41,000 | PFC $25,000
- Accounts receivable (net): BWC $8,000 | PFC $7,500
- Inventory: BWC $30,500 | PFC $48,400
- Property, plant & equipment (net): BWC $70,000 | PFC $95,000
- Other: BWC $43,500 | PFC $35,000
- **Total Assets:** BWC $193,000 | PFC $210,900
- **Liabilities:**
- Current debt: BWC $5,200 | PFC $15,400
- Long-term debt (interest rate 10%): BWC $60,000 | PFC $70,000
- Common stock ($10 par value): BWC $36,000 | PFC $40,000
- Paid-in capital in excess of par: BWC $13,000 | PFC $16,000
- Retained earnings: BWC $78,800 | PFC $69,500
- **Total Liabilities and Stockholders' Equity:** BWC $193,000 | PFC $210,900
### Income Statements:
- **Revenue and Expenses:**
- Sales revenue (1/3 on credit): BWC $447,000 | PFC $689,000
- Cost of goods sold: BWC $190,000 | PFC $468,000
- Operating expenses: BWC $167,000 | PFC $182,000
- Other: BWC $57,000 | PFC $16,000
- **Net Income:** BWC $45,000 | PFC $23,000
### Market Data:
- Average stock price at end of current year: BWC $30 | PFC $30
- Income tax rate: BWC 30% | PFC 30%
- Dividends declared and paid in current year: BWC $1.20 | PFC $0.60
Both companies are in the fish catching and manufacturing business. They
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