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Instructions: I. Resolve the ratios listed on table a for each year (2020 & 2021): a. For each ratio includes the formula with math computes (2020 & 2021) b. . Fill M&G Industries Ratio Analysis Table A. (2020 & 2021)

Instructions: I. Resolve the ratios listed on table a for each year (2020 & 2021): a. For each ratio includes the formula with math computes (2020 & 2021) b. . Fill M&G Industries Ratio Analysis Table A. (2020 & 2021)

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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Instructions:

I. Resolve the ratios listed on table a for each year (2020 & 2021):

a. For each ratio includes the formula with math computes (2020 & 2021)

b. . Fill M&G Industries Ratio Analysis Table A. (2020 & 2021)  

II. Perform the following Analysis:  

a. Explain each ratio results for 2021 only.

b. Compare each ratio performance with the previous year results (compare 2021 results with 2020 results)

c. Compare each Ratio results for 2021 with their respective Industry average. 

 

Based on the preceeding statements, complete the following table: M & G Industries Ratio Analysis Industry Averagis Acaua! Actual 2020 2021 Current ratio Acid-test ratio Average collection period Inventory turnover Debt ratio Times interest earmed Total asset turnover Fixed asset turnover Return on equity 1.80 .70 37.00 2.50 58% 3.80 1.14 1.40 9.5%
Transcribed Image Text:Based on the preceeding statements, complete the following table: M & G Industries Ratio Analysis Industry Averagis Acaua! Actual 2020 2021 Current ratio Acid-test ratio Average collection period Inventory turnover Debt ratio Times interest earmed Total asset turnover Fixed asset turnover Return on equity 1.80 .70 37.00 2.50 58% 3.80 1.14 1.40 9.5%
Analysis of Financial Statements (Financial Ratios) M & G Industries Balance Sheet For December 31, 2020 and 2021 2020 2021 Cash Accounts receivable Inventories Total current asseis Land $ 9,000 12,500 29,000 $ 50,500 20,000 500 16,000 45,500 $ 62,000 26,000 100,000 Buildings and equipment Less: allowance for depreciation Total fixed assets Total assets 70,000 (28,000) $ 62,000 $112,500 $ 10,500 17,000 $ 27,500 28,750 31,500 24,750 $112,500 (38,000) $ 88,000 $150,000 $ 22,000 47,000 $ 69,000 22,950 31,500 26,550 $150,000 Accounts Payable Short-term bank notes Total current liabilities Long-term debt Common stock Retained earnings Total debt and equity M&G Industries Income Statement For the Years Ended December 31, 2020 and 2021 2020 2021 Sales (all credit) Cost of goods sold Gross profit Operating expenses Fixed cash operating expenses Variable operating expenses Depreciation Total operating expenses Earnings before interest and taxes Interest expense Earnings before taxes Талеs $125,000 75,000 50,000 $160,000 96,000 $ 64,000 $ 21,000 12,500 $ 21,000 16,000 4,500 $ 38,000 $ 12,000 3,000 $ 9,000 4,500 $ 4,500 10,000 $ 47,000 $ 17,000 6,100 $ 10,900 5,450 $ 5,450 Net income
Transcribed Image Text:Analysis of Financial Statements (Financial Ratios) M & G Industries Balance Sheet For December 31, 2020 and 2021 2020 2021 Cash Accounts receivable Inventories Total current asseis Land $ 9,000 12,500 29,000 $ 50,500 20,000 500 16,000 45,500 $ 62,000 26,000 100,000 Buildings and equipment Less: allowance for depreciation Total fixed assets Total assets 70,000 (28,000) $ 62,000 $112,500 $ 10,500 17,000 $ 27,500 28,750 31,500 24,750 $112,500 (38,000) $ 88,000 $150,000 $ 22,000 47,000 $ 69,000 22,950 31,500 26,550 $150,000 Accounts Payable Short-term bank notes Total current liabilities Long-term debt Common stock Retained earnings Total debt and equity M&G Industries Income Statement For the Years Ended December 31, 2020 and 2021 2020 2021 Sales (all credit) Cost of goods sold Gross profit Operating expenses Fixed cash operating expenses Variable operating expenses Depreciation Total operating expenses Earnings before interest and taxes Interest expense Earnings before taxes Талеs $125,000 75,000 50,000 $160,000 96,000 $ 64,000 $ 21,000 12,500 $ 21,000 16,000 4,500 $ 38,000 $ 12,000 3,000 $ 9,000 4,500 $ 4,500 10,000 $ 47,000 $ 17,000 6,100 $ 10,900 5,450 $ 5,450 Net income
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