100,000 150,000 340,000 110,000 80,000 20,000 20,000 200,000 100,000 300,000 100,000 80,000 18,000 30,000
100,000 150,000 340,000 110,000 80,000 20,000 20,000 200,000 100,000 300,000 100,000 80,000 18,000 30,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![FINANCIAL STATEMENT ANALYSIS AND RATIO ANALYSIS
The following are the balance sheet and income statement data of PRT Company:
December 31
1997
1998
Balance Sheet Accounts
Cash
P30,000
P52,000
Marketable Securities
170,000
200,000
100,000
Accounts Receivable, net
Inventories
200,000
100,000
150,000
Machinery and Equipment, net
340,000
300,000
110,000
Land and Building, net
Goodwill
80,000
Deferred Charges
20,000
100,000
80,000
18,000
30,000
158,000
12,000
Notes Payable, Trade
20,000
122,000
Accounts Payable, Trade
Expenses Payable
8,000
Long-term Notes-Due 2008
500,000
450,000
100,000
15% Preferred Stock, P100 par
100,000
Common Stock, P10 par
200,000
200,000
100,000
Retained Earnings
50,000
1998 Income Statement Accounts
Sales
P1,050,000
50,000
Sales Returns and Allowances
100,000
Inventory, December 31, 1998
Inventory, December 31, 1997
Purchases
150,000
550,000
Selling Expenses
80,000
Administrative Expenses (including depreciation of P25,000)
120,000
Interest on Long-term Notes
50,000
Income Taxes, 35%
52,500
Additional Information:
1. Dividends paid on preferred stock
15,000
2. Dividends paid on common stock
32,500
18
3. Market price per share of common stock
5. Evaluate the firm's long-term solvency for 1998 by computing:
a. Debt to Equity Ratio
b. Cash Flow from Operations to Total Liabilities
c. Times Interest Earned
d. Times preferred Dividends earned.
L](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F58a53162-b1cb-487d-a869-0ab2c8eadd5e%2F7b216b4f-ea17-4a24-a184-cf7f5578f2dc%2F1b8pcmo_processed.png&w=3840&q=75)
Transcribed Image Text:FINANCIAL STATEMENT ANALYSIS AND RATIO ANALYSIS
The following are the balance sheet and income statement data of PRT Company:
December 31
1997
1998
Balance Sheet Accounts
Cash
P30,000
P52,000
Marketable Securities
170,000
200,000
100,000
Accounts Receivable, net
Inventories
200,000
100,000
150,000
Machinery and Equipment, net
340,000
300,000
110,000
Land and Building, net
Goodwill
80,000
Deferred Charges
20,000
100,000
80,000
18,000
30,000
158,000
12,000
Notes Payable, Trade
20,000
122,000
Accounts Payable, Trade
Expenses Payable
8,000
Long-term Notes-Due 2008
500,000
450,000
100,000
15% Preferred Stock, P100 par
100,000
Common Stock, P10 par
200,000
200,000
100,000
Retained Earnings
50,000
1998 Income Statement Accounts
Sales
P1,050,000
50,000
Sales Returns and Allowances
100,000
Inventory, December 31, 1998
Inventory, December 31, 1997
Purchases
150,000
550,000
Selling Expenses
80,000
Administrative Expenses (including depreciation of P25,000)
120,000
Interest on Long-term Notes
50,000
Income Taxes, 35%
52,500
Additional Information:
1. Dividends paid on preferred stock
15,000
2. Dividends paid on common stock
32,500
18
3. Market price per share of common stock
5. Evaluate the firm's long-term solvency for 1998 by computing:
a. Debt to Equity Ratio
b. Cash Flow from Operations to Total Liabilities
c. Times Interest Earned
d. Times preferred Dividends earned.
L
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