The current year financial statements for two competitors are presented below. Please analyze their financials.Note: if a ratio cannot be solved given the data provided, please leave it blank. There are a few ratios that cannot be solved giventhe information provided.Balance sheet:CashAccounts receivable (net)InventoryProperty & equipment (net)Other assetsTotal assetsCurrent liabilitiesLong-term debt (interest rate: 15 %)Capital stock ($10 par value)Additional paid-in capitalRetained earningsTotal liabilities and stockholders' equityIncome statement:Sales revenue (1/2 on credit)Cost of goods soldOperating expensesNet incomeOther data:Per share stock price at end of current yearAverage income tax rateDividends declared and paid in current yearProfitability ratios:1.2.3.4.5.6.Ratio7.8.9.10.Return on equityReturn on assetsGross profit percentageNet profit marginEarnings per shareQuality of incomeAsset turnover ratios:Total asset turnoverFixed asset turnoverReceivable turnoverInventory turnoverLiquidity ratios:11. Current ratio12.13.Quick ratioCash ratioSolvency ratios:14. Times interest earned ratio15. Cash coverage ratio16. Debt/equity ratioMarket ratios:Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and eachhas had steady growth. The management of each has a different viewpoint in many respects. Blue Water is more conservative, and asits president has said, "We avoid what we consider to be undue risk." Neither company is publicly held.17. Price/earnings ratio18. Dividend yield ratioRequired:1. Complete a schedule that reflects a ratio analysis of each company. (Round your intermediate calculations and final answers to 2decimal places. Enter percentage answers rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).)BLUE WATERCOMPANY%%%%%PRIME FISHCOMPANYBlue Water%%%%$ 41,30039,50097,500144,50084,300$ 407,100$%97,50067,100150,10029,30063,100$ 407,100$ 442,500(239,500)(161,600)$ 41,400$22.345%$ 33,300Prime Fish$ 20,70031,90041,800404,600308,000$ 807,000$53,50060,600515,000106,30071,600$807,000$ 799,000(400, 300)(311,300)87,400$$1845%$ 149,500

Ratio analysis involves the use of various financial metrics to evaluate the performance, financial…

Profitability ratios: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Ratio 11. 12. 13. Return on equity Return on assets Asset turnover ratios: Gross profit percentage Net profit margin Earnings per share Quality of income Liquidity ratios: 17. 18. Total asset turnover Fixed asset turnover Receivable turnover Inventory turnover Current ratio Quick ratio Cash ratio Solvency ratios: 14. Times interest earned ratio 15. Cash coverage ratio 16. Market ratios: Debt/equity ratio Price/earnings ratio Dividend yield ratio BLUE WATER COMPANY % % % % % PRIME FISH COMPANY % % *** % % %

Profitability ratios: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Ratio 11. 12. 13. Return on equity Return on assets Asset turnover ratios: Gross profit percentage Net profit margin Earnings per share Quality of income Liquidity ratios: 17. 18. Total asset turnover Fixed asset turnover Receivable turnover Inventory turnover Current ratio Quick ratio Cash ratio Solvency ratios: 14. Times interest earned ratio 15. Cash coverage ratio 16. Market ratios: Debt/equity ratio Price/earnings ratio Dividend yield ratio BLUE WATER COMPANY % % % % % PRIME FISH COMPANY % % *** % % %

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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