see attached 1-3 and 1-5 to answer this  Refer to the financial statements of Mixon Company in Exercises 1–3 and 1–5. Evaluate the effi- ciency and profitability of the company by computing the following: (a) net profit margin, (b) total asset turnover, and (c) return on total assets. Comment on these ratio results.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

see attached 1-3 and 1-5 to answer this 

Refer to the financial statements of Mixon Company in Exercises 1–3 and 1–5. Evaluate the effi- ciency and profitability of the company by computing the following: (a) net profit margin, (b) total asset turnover, and (c) return on total assets. Comment on these ratio results.

EXERCISE 1-5
Evaluating Short-Term
Liquidity
Refer to the information in Exercise 1-3 about Mixon Company. The company's income state-
ments for the years ended December 31, 2006 and 2005 show the following:
2006
Sales
Cost of goods sold
Other operating expenses
Interest expense
Income taxes
Total costs and expenses
Net income
Earnings per share
$410,225
208,550
11,100
8,525
$672,500
(638,400)
$ 34,100
$ 2.10
$344,500
133,980
12,300
7,845
2005
$530,000
(498,625)
$ 31,375
$
1.93
Required:
For the years ended December 31, 2006 and 2005, assume all sales are on credit and then compute
the following: (a) collection period, (b) accounts receivable turnover, (c) inventory turnover, and
(d) days' sales in inventory. Comment on the changes in the ratios from 2005 to 2006.
Transcribed Image Text:EXERCISE 1-5 Evaluating Short-Term Liquidity Refer to the information in Exercise 1-3 about Mixon Company. The company's income state- ments for the years ended December 31, 2006 and 2005 show the following: 2006 Sales Cost of goods sold Other operating expenses Interest expense Income taxes Total costs and expenses Net income Earnings per share $410,225 208,550 11,100 8,525 $672,500 (638,400) $ 34,100 $ 2.10 $344,500 133,980 12,300 7,845 2005 $530,000 (498,625) $ 31,375 $ 1.93 Required: For the years ended December 31, 2006 and 2005, assume all sales are on credit and then compute the following: (a) collection period, (b) accounts receivable turnover, (c) inventory turnover, and (d) days' sales in inventory. Comment on the changes in the ratios from 2005 to 2006.
Mixon Company's year-end balance sheets show the following:
Cash
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets
Accounts payable ..
Long-term notes payable secured
by mortgages on plant assets
Common stock, $10 par value
Retained earnings
Total liabilities and equity
2006
$ 30,800
88,500
111,500
9,700
277,500
$518,000
$128,900
97,500
162,500
129,100
$518,000
2005
2004
$ 35,625
$36,800
62,500
49,200
82,500
53,000
9,375
4,000
255,000
229,500
$445,000
$372,500
$ 75,250 $ 49,250
102,500
82,500
162,500
162,500
104,750
78,250
$445,000 $372,500
Required:
Compare the year-end short-term liquidity position of this company at the end of 2006, 2005,
and 2004 by computing the: (a) current ratio and (b) acid-test ratio. Comment on the ratio
results.
EXERCISE 1-3
Evaluating Short-Term
Liquidity
Transcribed Image Text:Mixon Company's year-end balance sheets show the following: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Accounts payable .. Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 2006 $ 30,800 88,500 111,500 9,700 277,500 $518,000 $128,900 97,500 162,500 129,100 $518,000 2005 2004 $ 35,625 $36,800 62,500 49,200 82,500 53,000 9,375 4,000 255,000 229,500 $445,000 $372,500 $ 75,250 $ 49,250 102,500 82,500 162,500 162,500 104,750 78,250 $445,000 $372,500 Required: Compare the year-end short-term liquidity position of this company at the end of 2006, 2005, and 2004 by computing the: (a) current ratio and (b) acid-test ratio. Comment on the ratio results. EXERCISE 1-3 Evaluating Short-Term Liquidity
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Income Statement Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education