Problem 2. Comparison of financial statements. Balance sheet 2023 2024 Current assets $ 9,500.00 Fixed assets $ 12,600.00 $ 40,500.00 $ 47,400.00 2024 Current liabilities $ 6,500.00 $ 8,400.00 Long-term debt $ 5,000.00 $ 6,000.00 2023 Equity $ 38,500.00 $ 45,600.00 Total assets $ 50,000.00 $ 60,000.00 Liability and equity $ 50,000.00 $ 60,000.00 a) Prepare the 2024 combined common-size, common-base year balance sheet. (15 points) b) Calculate the following financial ratios for each year. Comment on each ratio and interpret the changes from 2023 to 2024. (20 points) a. Current ratio b. Debt to equity ratio c. Total asset turnover d. ROE For your calculation, use the following values for sales and net income 2023 2024 Sales $40,000.00 $ 42,000.00 Net income $ 7,500.00 $ 12,000.00 c) Use the DuPont analysis on each year and interpret your results. (15 points)
Problem 2. Comparison of financial statements. Balance sheet 2023 2024 Current assets $ 9,500.00 Fixed assets $ 12,600.00 $ 40,500.00 $ 47,400.00 2024 Current liabilities $ 6,500.00 $ 8,400.00 Long-term debt $ 5,000.00 $ 6,000.00 2023 Equity $ 38,500.00 $ 45,600.00 Total assets $ 50,000.00 $ 60,000.00 Liability and equity $ 50,000.00 $ 60,000.00 a) Prepare the 2024 combined common-size, common-base year balance sheet. (15 points) b) Calculate the following financial ratios for each year. Comment on each ratio and interpret the changes from 2023 to 2024. (20 points) a. Current ratio b. Debt to equity ratio c. Total asset turnover d. ROE For your calculation, use the following values for sales and net income 2023 2024 Sales $40,000.00 $ 42,000.00 Net income $ 7,500.00 $ 12,000.00 c) Use the DuPont analysis on each year and interpret your results. (15 points)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Problem 2. Comparison of financial statements.
Balance sheet
2023
2024
Current assets $ 9,500.00
Fixed assets
$ 12,600.00
$ 40,500.00 $ 47,400.00
2024
Current liabilities $ 6,500.00 $ 8,400.00
Long-term debt $ 5,000.00 $ 6,000.00
2023
Equity
$ 38,500.00 $ 45,600.00
Total assets $ 50,000.00 $ 60,000.00 Liability and equity $ 50,000.00 $ 60,000.00
a) Prepare the 2024 combined common-size, common-base year balance sheet.
(15 points)
b) Calculate the following financial ratios for each year. Comment on each ratio
and interpret the changes from 2023 to 2024. (20 points)
a. Current ratio
b. Debt to equity ratio
c. Total asset turnover
d. ROE
For your calculation, use the following values for sales and net income
2023
2024
Sales
$40,000.00
$ 42,000.00
Net income $ 7,500.00
$ 12,000.00
c) Use the DuPont analysis on each year and interpret your results. (15 points)
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