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1. Using year-end balances for all ratios, compute the t

1. Using year-end balances for all ratios, compute the t

FINANCIAL ACCOUNTING
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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**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
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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