Part C: Ratio CalculationsAssume Luxio has 1000 shares of common stock outstanding, and the market price of the shares at the end of 2009 was $45. Also assume that the share price and number of outstanding shares does not change.Using the exact formulas found in the textbook, compute all the ratios listed in Appendix A for 2008, 2009, and 2010 (write n/a where you don’t have enough information for a specific year). Place all your answers in the format found in Appendix A (attached).Based entirely on your ratio analysis explain in detail the strengths and weaknesses of the company to a potential common equity investor. Summarize by making recommendations to the firm. 2.1X··1··2·3··4·1·5·1·6·17·1·8·9·10 11 12 13 14 15 16 17 18 19Appendix A:Short-term solvency ratiosCurrent ratioQuick ratioCash ratioAsset utilization ratiosTotal asset turnoverInventory turnoverReceivables turnoverLong-Term solvency ratiosDebt-equity ratiosRatio Calculations and AnalysisTimes interest earned ratioCash coverage ratioProfitability ratiosProfit marginReturn on assetsReturn on equityMarket value ratiosPrice-earnings ratioDividends per shareMarket to book ratio B1.1.1.2.1.31415161718 9 10 11 12 13 14 15 16 17 18SalesCost of goods soldDepreciationEarnings before interest & tax $Interest paid$Taxable income$Taxes 35%$Net Income$01 Dividends$2 Addition to Retained Earnings $34 Dividend payout ratio56 Assets7 Cash8 Accounts Receivables9 InventoryONet plant & equipment2009 Income Statement12 Liabilities & Equity3 Accounts payable4 notes payable5 other6 common stock7 retained earnings8Current AssetsCashAccounts ReceivableInventoryTotal AssetsFixed AssetsNet Plant & EquipmentTotal Assets$ 285,760.00$ 205,132.00$ 21,950.0058,678.009,875.0048,803.0017,081.0531,721.95AssetsSSSS$20092010$ 22,150.00 $ 26,580.0013,865.00 $ 16,638.00$ 24,876.00 $ 29,851.20$ 184,735.00 $221,682.00$10ssss2009201017,318.00 $ 20,781.6010,000.00 $ 10,000.0014,451.00 $ 14,451.00$ 20,000.00 $ 20,000.00$ 98,857.00 $115,748.00$18,000.0013,721.95$56.74%20082009E$ 18,270.00 $ 22,150.00$ 12,315.00 $ 13,865.00$ 21,584.00 $ 24,876.00$ 52,169.00 $ 60,891.00$168,326.00 $184,735.00LUXIO GOLF CORP.2009 Balance Sheets$220,495.00 $245,626.00FGH2010 Income Statement$SalesCost of goods soldDepreciationEarnings before interest & taxInterest paidTaxable incomeTaxes 32%Net IncomeDividendsAddition to Retained EarningsDividend Payout ratioLiabilities & Owners EquityCurrent LiabilitiesAccounts PayableNotes PayableOtherTotalLong-term DebtssssOwners EquityCommon Stock & paid inRetained EarningsTotalTotal Liabilities & Owner's$$$$SSS$$$SS$External Financing Needed113,770.60$(Total assets - Total Current Liabilities & Equity)342,912.00246,158.4021,950.0074,803.609,875.0064,928.6020,777.1544,151.45200827,260.4516,891.0061.74%2009$ 16,215.00 $ 17,318.00$ 8,000.00 $ 10,000.00$ 11,145.00 $ 14,451.00$ 35,360.00 $ 41,769.00$ 80,000.00 $ 85,000.00$ 20,000.00 $ 20,000.00$ 85,135.00 $ 98,857.00$105,135.00 $118,857.00$220,495.00 $245,626.00J

Current Ratio / Quick Ratio / Operating Cash Flow Ratio Current Ratio - Current Asset / Current…

: Sales $ 285,760.00 $ 205,132.00 $ 21,950.00 58,678.00 Earnings before interest & tax $ Interest paid $ 9,875.00 48,803.00 17,081.05 31,721.95 Cost of goods sold Depreciation Taxable income Taxes 35% Net Income C D 2009 Income Statement 0 1 Dividends $ 2 Addition to Retained Earnings $ 3 4 Dividend payout ratio 5 6 Assets 7 Cash B Accounts Receivables 9 Inventory O Net plant & equipment 1 2 Liabilities & Equity 3 Accounts payable 4 notes payable 5 other 6 common stock 7 retained earnings 8 Current Assets Cash Accounts Receivable Inventory Total Assets Fixed Assets Net Plant & Equipment Total Assets $ $ $ Assets SsSsS $ 2009 2010 $ 22,150.00 $ 26,580.00 13,865.00 $ 16,638.00 24,876.00 $ 29,851.20 $ 184,735.00 $221,682.00 $ $ sssss $ 18,000.00 13,721.95 $ $ 56.74% 17,318.00 $ 20,781.60 10,000.00 $ 10,000.00 14,451.00 $ 14,451.00 20,000.00 $ 20,000.00 $ 98,857.00 $115,748.00 2008 2009 2009 E $ 18,270.00 $ 22,150.00 $ 12,315.00 $ 13,865.00 $ 21,584.00 $ 24,876.00 $ 52,169.00 $ 60,891.00 $168,326.00 $184,735.00 2010 $220,495.00 $245,626.00 LUXIO GOLF CORP. 2009 Balance Sheets F Sales Cost of goods sold Depreciation G H 2010 Income Statement $ Earnings before interest & tax Interest paid Taxable income Taxes 32% Net Income Dividends Addition to Retained Earnings Dividend Payout ratio Liabilities & Owners Equity Current Liabilities Accounts Payable Notes Payable Other Total Long-term Debt ssss Owners Equity Common Stock & paid in Retained Earnings Total Total Liabilities & Owner's $ $ $ $ $ $ $ $ 1 2008 342,912.00 246,158.40 21,950.00 74,803.60 External Financing Needed 113,770.60 (Total assets - Total Current Liabilities & Equity) 9,875.00 64,928.60 20,777.15 44,151.45 27,260.45 16,891.00 61.74% 2009 $ 16,215.00 $ 17,318.00 $ 8,000.00 $ 10,000.00 $ 11,145.00 $ 14,451.00 $ 35,360.00 $ 41,769.00 $ 80,000.00 $ 85,000.00 $ 20,000.00 $ 20,000.00 $ 85,135.00 $ 98,857.00 $105,135.00 $118,857.00 $220,495.00 $245,626.00

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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Part C: Ratio Calculations

Assume Luxio has 1000 shares of common stock outstanding, and the market price of the shares at the end of 2009 was $45. Also assume that the share price and number of outstanding shares does not change.
Using the exact formulas found in the textbook, compute all the ratios listed in Appendix A for 2008, 2009, and 2010 (write n/a where you don’t have enough information for a specific year). Place all your answers in the format found in Appendix A (attached).
Based entirely on your ratio analysis explain in detail the strengths and weaknesses of the company to a potential common equity investor. Summarize by making recommendations to the firm.

2.1X··1··2·3··4·1·5·1·6·17·1·8·9·10 11 12 13 14 15 16 17 18 19
Appendix A:
Short-term solvency ratios
Current ratio
Quick ratio
Cash ratio
Asset utilization ratios
Total asset turnover
Inventory turnover
Receivables turnover
Long-Term solvency ratios
Debt-equity ratios
Ratio Calculations and Analysis
Times interest earned ratio
Cash coverage ratio
Profitability ratios
Profit margin
Return on assets
Return on equity
Market value ratios
Price-earnings ratio
Dividends per share
Market to book ratio

B
1.
1.1.2.1.31415161718 9 10 11 12 13 14 15 16 17 18
Sales
Cost of goods sold
Depreciation
Earnings before interest & tax $
Interest paid
$
Taxable income
$
Taxes 35%
$
Net Income
$
0
1 Dividends
$
2 Addition to Retained Earnings $
3
4 Dividend payout ratio
5
6 Assets
7 Cash
8 Accounts Receivables
9 Inventory
ONet plant & equipment
2009 Income Statement
1
2 Liabilities & Equity
3 Accounts payable
4 notes payable
5 other
6 common stock
7 retained earnings
8
Current Assets
Cash
Accounts Receivable
Inventory
Total Assets
Fixed Assets
Net Plant & Equipment
Total Assets
$ 285,760.00
$ 205,132.00
$ 21,950.00
58,678.00
9,875.00
48,803.00
17,081.05
31,721.95
Assets
SSSS
$
2009
2010
$ 22,150.00 $ 26,580.00
13,865.00 $ 16,638.00
$ 24,876.00 $ 29,851.20
$ 184,735.00 $221,682.00
$
10
ssss
2009
2010
17,318.00 $ 20,781.60
10,000.00 $ 10,000.00
14,451.00 $ 14,451.00
$ 20,000.00 $ 20,000.00
$ 98,857.00 $115,748.00
$
18,000.00
13,721.95
$
56.74%
2008
2009
E
$ 18,270.00 $ 22,150.00
$ 12,315.00 $ 13,865.00
$ 21,584.00 $ 24,876.00
$ 52,169.00 $ 60,891.00
$168,326.00 $184,735.00
LUXIO GOLF CORP.
2009 Balance Sheets
$220,495.00 $245,626.00
F
G
H
2010 Income Statement
$
Sales
Cost of goods sold
Depreciation
Earnings before interest & tax
Interest paid
Taxable income
Taxes 32%
Net Income
Dividends
Addition to Retained Earnings
Dividend Payout ratio
Liabilities & Owners Equity
Current Liabilities
Accounts Payable
Notes Payable
Other
Total
Long-term Debt
ssss
Owners Equity
Common Stock & paid in
Retained Earnings
Total
Total Liabilities & Owner's
$
$
$
$
SSS
$
$
$
SS
$
External Financing Needed
113,770.60
$
(Total assets - Total Current Liabilities & Equity)
342,912.00
246,158.40
21,950.00
74,803.60
9,875.00
64,928.60
20,777.15
44,151.45
2008
27,260.45
16,891.00
61.74%
2009
$ 16,215.00 $ 17,318.00
$ 8,000.00 $ 10,000.00
$ 11,145.00 $ 14,451.00
$ 35,360.00 $ 41,769.00
$ 80,000.00 $ 85,000.00
$ 20,000.00 $ 20,000.00
$ 85,135.00 $ 98,857.00
$105,135.00 $118,857.00
$220,495.00 $245,626.00
J

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Profitability ratios
Profit margin
Return on assets
Return on equity
Market value ratios
Price-earnings ratio
Dividends per share
Market to book ratio

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