Connor Ltd. is a large private company owned by the Connor family. It operates a manufacturing business in northern Ontario. It has applied to the ICB bank for a new loan of $100 million to expand its manufacturing facilities. You are a financial analyst with ICB. You have just been given an assignment to analyze Connor's Year 7 financial statements and to identify any concerns about Connor's performance and financial condition. The following are financial statements for Connor Ltd. for Year 7: Asset Cash Accounts receivable Inventory Property, plant and equipment Total Assets Liabilities and Shareholders' Equity Accounts payable Other accrued liabilities Bonds payable Common shares BALANCE SHEETS (In 000s) Retained earnings Total Liabilities and Shareholders' Equity Sales Cost of goods sold Gross margin Depreciation expense Other expenses Income tax expense Net income INCOME STATEMENT (In 000s) Year 7 $ 2,000,000 (1, 370, 000) 630, 000 (48,000) (416, 000) (66, 400) 99,600 $ Year 7 $ 15,000 215, 000 330, 000 310, 000 $ 870,000 $ 210,000 70,000 200,000 175,000 215, 000 $ 870,000 Year 6 $ 1,950,000 (1, 290, 000) 660, 000 (42, 000) (435, 000) (76, 860) $ 106, 140 Year 6 $ 38,000 202, 000 320, 000 270, 000 $830,000 $ 217,000 58,000 200,000 180, 000 175,000 $830,000 Additional Information • Connor uses the straight-line method when depreciating its property, plant, and equipment. • Interest expense was $10,000 for Year 6 and Year 7. Required: (a) Convert Connor's financial statements for both Year 7 and Year 6 into common-sized financial statements using: (Inp
Connor Ltd. is a large private company owned by the Connor family. It operates a manufacturing business in northern Ontario. It has applied to the ICB bank for a new loan of $100 million to expand its manufacturing facilities. You are a financial analyst with ICB. You have just been given an assignment to analyze Connor's Year 7 financial statements and to identify any concerns about Connor's performance and financial condition. The following are financial statements for Connor Ltd. for Year 7: Asset Cash Accounts receivable Inventory Property, plant and equipment Total Assets Liabilities and Shareholders' Equity Accounts payable Other accrued liabilities Bonds payable Common shares BALANCE SHEETS (In 000s) Retained earnings Total Liabilities and Shareholders' Equity Sales Cost of goods sold Gross margin Depreciation expense Other expenses Income tax expense Net income INCOME STATEMENT (In 000s) Year 7 $ 2,000,000 (1, 370, 000) 630, 000 (48,000) (416, 000) (66, 400) 99,600 $ Year 7 $ 15,000 215, 000 330, 000 310, 000 $ 870,000 $ 210,000 70,000 200,000 175,000 215, 000 $ 870,000 Year 6 $ 1,950,000 (1, 290, 000) 660, 000 (42, 000) (435, 000) (76, 860) $ 106, 140 Year 6 $ 38,000 202, 000 320, 000 270, 000 $830,000 $ 217,000 58,000 200,000 180, 000 175,000 $830,000 Additional Information • Connor uses the straight-line method when depreciating its property, plant, and equipment. • Interest expense was $10,000 for Year 6 and Year 7. Required: (a) Convert Connor's financial statements for both Year 7 and Year 6 into common-sized financial statements using: (Inp
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Connor Ltd. is a large private company owned by the Connor family. It operates a manufacturing business in northern
Ontario. It has applied to the ICB bank for a new loan of $100 million to expand its manufacturing facilities.
You are a financial analyst with ICB. You have just been given an assignment to analyze Connor's Year 7 financial
statements and to identify any concerns about Connor's performance and financial condition.
The following are financial statements for Connor Ltd. for Year 7:
Asset
Cash
Accounts receivable
Inventory
Property, plant and equipment
Total Assets
Liabilities and Shareholders' Equity
Accounts payable
Other accrued liabilities
Bonds payable
Common shares
BALANCE SHEETS
(In 000s)
Retained earnings
Total Liabilities and Shareholders' Equity
Sales
Cost of goods sold
Gross margin
Depreciation expense
Other expenses
Income tax expense
Net income
INCOME STATEMENT
(In 000s)
Year 7
$ 2,000,000
(1, 370, 000)
630, 000
(48,000)
(416, 000)
(66,400)
99, 600
$
Year 7
$
15, 000
215, 000
330, 000
310, 000
$ 870,000
$ 210,000
70,000
200,000
175,000
215, 000
$ 870,000
Year 6
$ 1,950,000
(1, 290, 000)
660, 000
(42, 000)
(435, 000)
(76, 860)
106, 140
$
Year 6
$
38, 000
202, 000
320, 000
270, 000
$830,000
$ 217,000
58,000
200, 000
180,000
175,000
$830,000
Additional Information
• Connor uses the straight-line method when depreciating its property, plant, and equipment.
• Interest expense was $10,000 for Year 6 and Year 7.
Required:
(a) Convert Connor's financial statements for both Year 7 and Year 6 into common-sized financial statements using: (Inpu
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