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GRIZZLY BEAR MUFFIN COMPANY Balance Sheet Income Statement (SM) Assets ($M) Liabilities & Shareholders' Equity ($M) 2019 2020 2019 2020 2020 Current Liabilities Accounts Payable Notes Payable Sales |Cost of goods sold Gross Profit Current Assets $84,409 Cash 5,290 5,822 6,120 7,098 58,218 Accounts Receivable 2,738 3,656 3,168 2,700 26,191 Depreciation 7,410 18,781 Inventory 5,586 6,517 Other Current Liabilities 3,055 4,088 Total Current Assets 13,614 15,995 Total Current Liabilities 12,343 13,886 ЕBIT Interest Expense 3,281 |Long Term Debt 19,000 22,000 Taxable Income 15,500 Fixed Assets Net Plant and Equipment Taxes (35%) 5,425 Shareholders' Equity Common Stock & paid-in-surplus Accumulated Retained Earnings Total Shareholders Equity 71,433 79,669 Net Income $10,075 9,000 9,000 Dividends 4,001 44,704 50,778 Retained Earnings 6,074 53,704 59,778 EPS PE Ratio 4.03 Total Assets $85,047| $95,664 Total Liabilities & Shareholders' Equity $85,047 || $95,664 14.5

GRIZZLY BEAR MUFFIN COMPANY Balance Sheet Income Statement (SM) Assets ($M) Liabilities & Shareholders' Equity ($M) 2019 2020 2019 2020 2020 Current Liabilities Accounts Payable Notes Payable Sales |Cost of goods sold Gross Profit Current Assets $84,409 Cash 5,290 5,822 6,120 7,098 58,218 Accounts Receivable 2,738 3,656 3,168 2,700 26,191 Depreciation 7,410 18,781 Inventory 5,586 6,517 Other Current Liabilities 3,055 4,088 Total Current Assets 13,614 15,995 Total Current Liabilities 12,343 13,886 ЕBIT Interest Expense 3,281 |Long Term Debt 19,000 22,000 Taxable Income 15,500 Fixed Assets Net Plant and Equipment Taxes (35%) 5,425 Shareholders' Equity Common Stock & paid-in-surplus Accumulated Retained Earnings Total Shareholders Equity 71,433 79,669 Net Income $10,075 9,000 9,000 Dividends 4,001 44,704 50,778 Retained Earnings 6,074 53,704 59,778 EPS PE Ratio 4.03 Total Assets $85,047| $95,664 Total Liabilities & Shareholders' Equity $85,047 || $95,664 14.5

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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Use information from the balance sheet and income statement to calculate the following financial ratios and the market value added (MVA).

(Whenever balance sheet numbers are used to calculate financial ratios, please ensure that you use the average of the 2019 and 2020 numbers in your calculation. To calculate MVA, you can assume that the average book value number for common stock and paid-in-surplus is the amount that the shareholders initially invested in the company.)

 

GRIZZLY BEAR MUFFIN COMPANY Balance Sheet Income Statement ($M) Assets ($M) Liabilities & Shareholders' Equity ($M) 2019 2020 2019 2020 2020 Current Assets Cash Current Liabilities Accounts Payable Notes Payable Sales $84,409 5,290 5,822 6,120 7,098 Cost of goods sold 58,218 26,191 Accounts Receivable 3,656 6,517 2,738 3,168 2,700 Gross Profit Inventory Total Current Assets 5,586 13,614 Other Current Liabilities 4,088 Depreciation 7,410 3,055 15,995 Total Current Liabilities 12,343 13,886 EBIT 18,781 Interest Expense 3,281 |Long Term Debt 19,000 22,000 Taxable Income 15,500 Fixed Assets Taxes (35%) 5,425 $10,075 Shareholders' Equity Common Stock & paid-in-surplus Accumulated Retained Earnings Total Shareholders Equity Net Plant and Equipment 71,433 79,669 Net Income 9,000 9.000 Dividends 4,001 44,704 Retained Earnings 50,778 59,778 6,074 53,704 EPS 4.03 Total Assets $85,047 $95,664 Total Liabilities & Shareholders' Equity | $85,047 $95,664 PE Ratio 14.5
Transcribed Image Text:GRIZZLY BEAR MUFFIN COMPANY Balance Sheet Income Statement ($M) Assets ($M) Liabilities & Shareholders' Equity ($M) 2019 2020 2019 2020 2020 Current Assets Cash Current Liabilities Accounts Payable Notes Payable Sales $84,409 5,290 5,822 6,120 7,098 Cost of goods sold 58,218 26,191 Accounts Receivable 3,656 6,517 2,738 3,168 2,700 Gross Profit Inventory Total Current Assets 5,586 13,614 Other Current Liabilities 4,088 Depreciation 7,410 3,055 15,995 Total Current Liabilities 12,343 13,886 EBIT 18,781 Interest Expense 3,281 |Long Term Debt 19,000 22,000 Taxable Income 15,500 Fixed Assets Taxes (35%) 5,425 $10,075 Shareholders' Equity Common Stock & paid-in-surplus Accumulated Retained Earnings Total Shareholders Equity Net Plant and Equipment 71,433 79,669 Net Income 9,000 9.000 Dividends 4,001 44,704 Retained Earnings 50,778 59,778 6,074 53,704 EPS 4.03 Total Assets $85,047 $95,664 Total Liabilities & Shareholders' Equity | $85,047 $95,664 PE Ratio 14.5
Short-term Solvency Ratios Current Ratio Quick Ratio NWC to total assets Asset Utilization Ratios Days' sales in inventory Receivables Turnover Long-term Solvency Ratios Equity Multiplier Cash Coverage Ratio Profitability Ratios Profit Margin Return on equity Market Value Ratios Market-to-book ratio Market Value Added ($M)
Transcribed Image Text:Short-term Solvency Ratios Current Ratio Quick Ratio NWC to total assets Asset Utilization Ratios Days' sales in inventory Receivables Turnover Long-term Solvency Ratios Equity Multiplier Cash Coverage Ratio Profitability Ratios Profit Margin Return on equity Market Value Ratios Market-to-book ratio Market Value Added ($M)
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Please find: Cash Coverage Ratio, Profit Margin, Return on eq


Use information from the balance sheet and income statement to calculate the following financial ratios and the market value added (MVA).

(Whenever balance sheet numbers are used to calculate financial ratios, please ensure that you use the average of the 2019 and 2020 numbers in your calculation. To calculate MVA, you can assume that the average book value number for common stock and paid-in-surplus is the amount that the shareholders initially invested in the company.)

Current Assets Cash Accounts Receivable Inventory Assets (SM) Total Current Assets Fixed Assets Net Plant and Equipment Total Assets 2019 2020 GRIZZLY BEAR MUFFIN COMPANY Balance Sheet 5,290 5,822 2,738 3,656 5,586 6,517 13,614 15,995 71,433 79,669 $85,047 $95,664 Liabilities & Shareholders' Equity (SM) 2019 Current Liabilities Accounts Payable Notes Payable Other Current Liabilities Total Current Liabilities. 2020 6,120 7,098 3.168 2,700 3,055 4,088 12,343 13,886 Long Term Debt Shareholders' Equity Common Stock & paid-in-surplus Accumulated Retained Earnings Total Shareholders Equity Total Liabilities & Shareholders' Equity $85,047 $95,664 19,000 22,000 9,000 9,000 44,704 50,778 53,704 59,778 Income Statement (SM) Sales Cost of goods sold Gross Profit Depreciation EBIT Interest Expense Taxable Income Taxes (35%) Net Income EPS PE Ratio 2020 Dividends Retained Earnings $84,409 58,218 26,191 7,410 18,781 3,281 15,500 5,425 $10,075 4.001 6,074 4.03 14.5
Transcribed Image Text:Current Assets Cash Accounts Receivable Inventory Assets (SM) Total Current Assets Fixed Assets Net Plant and Equipment Total Assets 2019 2020 GRIZZLY BEAR MUFFIN COMPANY Balance Sheet 5,290 5,822 2,738 3,656 5,586 6,517 13,614 15,995 71,433 79,669 $85,047 $95,664 Liabilities & Shareholders' Equity (SM) 2019 Current Liabilities Accounts Payable Notes Payable Other Current Liabilities Total Current Liabilities. 2020 6,120 7,098 3.168 2,700 3,055 4,088 12,343 13,886 Long Term Debt Shareholders' Equity Common Stock & paid-in-surplus Accumulated Retained Earnings Total Shareholders Equity Total Liabilities & Shareholders' Equity $85,047 $95,664 19,000 22,000 9,000 9,000 44,704 50,778 53,704 59,778 Income Statement (SM) Sales Cost of goods sold Gross Profit Depreciation EBIT Interest Expense Taxable Income Taxes (35%) Net Income EPS PE Ratio 2020 Dividends Retained Earnings $84,409 58,218 26,191 7,410 18,781 3,281 15,500 5,425 $10,075 4.001 6,074 4.03 14.5
Short-term Solvency Ratios Current Ratio Quick Ratio NWC to total assets Asset Utilization Ratios Days' sales in inventory Receivables Turnover Long-term Solvency Ratios Equity Multiplier Cash Coverage Ratio Profitability Ratios Profit Margin Return on equity Market Value Ratios Market-to-book ratio Market Value Added (SM)
Transcribed Image Text:Short-term Solvency Ratios Current Ratio Quick Ratio NWC to total assets Asset Utilization Ratios Days' sales in inventory Receivables Turnover Long-term Solvency Ratios Equity Multiplier Cash Coverage Ratio Profitability Ratios Profit Margin Return on equity Market Value Ratios Market-to-book ratio Market Value Added (SM)
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Follow-up Question

Please find: Days' sales in inventory, Receivables Turnover, Equity Multipli


Use information from the balance sheet and income statement to calculate the following financial ratios and the market value added (MVA).

(Whenever balance sheet numbers are used to calculate financial ratios, please ensure that you use the average of the 2019 and 2020 numbers in your calculation. To calculate MVA, you can assume that the average book value number for common stock and paid-in-surplus is the amount that the shareholders initially invested in the company.)

**Financial Ratios Overview** This table organizes key financial ratios into several categories, providing a comprehensive view of a company’s financial health and operational efficiency. Each category focuses on specific aspects of financial analysis. ### Short-term Solvency Ratios - **Current Ratio:** Measures the company's ability to cover its short-term liabilities with its short-term assets. - **Quick Ratio:** Similar to the current ratio but provides a more stringent assessment by excluding inventory from assets. - **NWC to Total Assets:** Evaluates the proportion of net working capital to total assets, indicating liquidity. ### Asset Utilization Ratios - **Days' Sales in Inventory:** Reflects the average number of days inventory is held before being sold. - **Receivables Turnover:** Measures how effectively a company collects its receivables or money owed by clients. ### Long-term Solvency Ratios - **Equity Multiplier:** Indicates the level of debt financing utilized by a business relative to its equity. - **Cash Coverage Ratio:** Assesses the ability to cover cash interest payments with cash generated from operations. ### Profitability Ratios - **Profit Margin:** Reveals the percentage of revenue that turns into profit after all expenses. - **Return on Equity:** Indicates how effectively a company utilizes shareholders' equity to generate profit. ### Market Value Ratios - **Market-to-Book Ratio:** Compares the market value of a company to its book value, providing insight into market perception. - **Market Value Added (MVA) ($M):** Calculates the value created over and above the invested capital, expressed in million dollars. This structured approach helps stakeholders evaluate various financial dimensions of a company for informed decision-making.
Transcribed Image Text:**Financial Ratios Overview** This table organizes key financial ratios into several categories, providing a comprehensive view of a company’s financial health and operational efficiency. Each category focuses on specific aspects of financial analysis. ### Short-term Solvency Ratios - **Current Ratio:** Measures the company's ability to cover its short-term liabilities with its short-term assets. - **Quick Ratio:** Similar to the current ratio but provides a more stringent assessment by excluding inventory from assets. - **NWC to Total Assets:** Evaluates the proportion of net working capital to total assets, indicating liquidity. ### Asset Utilization Ratios - **Days' Sales in Inventory:** Reflects the average number of days inventory is held before being sold. - **Receivables Turnover:** Measures how effectively a company collects its receivables or money owed by clients. ### Long-term Solvency Ratios - **Equity Multiplier:** Indicates the level of debt financing utilized by a business relative to its equity. - **Cash Coverage Ratio:** Assesses the ability to cover cash interest payments with cash generated from operations. ### Profitability Ratios - **Profit Margin:** Reveals the percentage of revenue that turns into profit after all expenses. - **Return on Equity:** Indicates how effectively a company utilizes shareholders' equity to generate profit. ### Market Value Ratios - **Market-to-Book Ratio:** Compares the market value of a company to its book value, providing insight into market perception. - **Market Value Added (MVA) ($M):** Calculates the value created over and above the invested capital, expressed in million dollars. This structured approach helps stakeholders evaluate various financial dimensions of a company for informed decision-making.
## Grizzly Bear Muffin Company Financial Statements ### Balance Sheet (in million $) #### Assets - **Current Assets** - Cash: - 2019: $5,290 - 2020: $5,822 - Accounts Receivable: - 2019: $2,738 - 2020: $3,656 - Inventory: - 2019: $5,586 - 2020: $6,517 - **Total Current Assets** - 2019: $13,614 - 2020: $15,995 - **Fixed Assets** - Net Plant and Equipment: - 2019: $71,433 - 2020: $79,669 - **Total Assets** - 2019: $85,047 - 2020: $95,664 #### Liabilities & Shareholders' Equity - **Current Liabilities** - Accounts Payable: - 2019: $6,120 - 2020: $7,098 - Notes Payable: - 2019: $3,168 - 2020: $2,700 - Other Current Liabilities: - 2019: $3,055 - 2020: $4,088 - **Total Current Liabilities** - 2019: $12,343 - 2020: $13,886 - **Long Term Debt** - 2019: $19,000 - 2020: $22,000 - **Shareholders’ Equity** - Common Stock & Paid-in-surplus: - 2019: $9,000 - 2020: $9,000 - Accumulated Retained Earnings: - 2019: $44,704 - 2020: $50,778 - **Total Shareholders Equity** - 2019: $53,704 - 2020: $59,778 - **Total Liabilities & Shareholders' Equity** - 2019: $85,047 - 2020: $95,664 ### Income Statement (in million $ for
Transcribed Image Text:## Grizzly Bear Muffin Company Financial Statements ### Balance Sheet (in million $) #### Assets - **Current Assets** - Cash: - 2019: $5,290 - 2020: $5,822 - Accounts Receivable: - 2019: $2,738 - 2020: $3,656 - Inventory: - 2019: $5,586 - 2020: $6,517 - **Total Current Assets** - 2019: $13,614 - 2020: $15,995 - **Fixed Assets** - Net Plant and Equipment: - 2019: $71,433 - 2020: $79,669 - **Total Assets** - 2019: $85,047 - 2020: $95,664 #### Liabilities & Shareholders' Equity - **Current Liabilities** - Accounts Payable: - 2019: $6,120 - 2020: $7,098 - Notes Payable: - 2019: $3,168 - 2020: $2,700 - Other Current Liabilities: - 2019: $3,055 - 2020: $4,088 - **Total Current Liabilities** - 2019: $12,343 - 2020: $13,886 - **Long Term Debt** - 2019: $19,000 - 2020: $22,000 - **Shareholders’ Equity** - Common Stock & Paid-in-surplus: - 2019: $9,000 - 2020: $9,000 - Accumulated Retained Earnings: - 2019: $44,704 - 2020: $50,778 - **Total Shareholders Equity** - 2019: $53,704 - 2020: $59,778 - **Total Liabilities & Shareholders' Equity** - 2019: $85,047 - 2020: $95,664 ### Income Statement (in million $ for
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