Selected financial information for CraneCorporation as of December are presented below. 2014 2013 Current assets $82,640 $63,140 Current liabilities 34,440 28,700 Stockholders’ equity 98,400 86,920 Total assets 246,000 221,400 Net sales and net income for 2014 were $369,000 and $29,520 respectively. Dividends of $3,280 were declared for common stockholders and $4,920for preferred shareholders in 2014. Preferred stockholders' equity is equal to 10% of total stockholders' equity. Compute the indicated ratios at December 31, 2014, or for the year ended December 31, 2014, as appropriate. (Round answers to 2 decimal places, e.g. 2.12.) 1. Return on assets enter percentages rounded to 2 demical places % 2. Profit margin enter percentages rounded to 2 demical places % 3. Payout ratio enter percentages rounded to 2 demical places % 4. Debt assets ratio enter percentages rounded to 2 demical places % 5. Current ratio enter ratio rounded to 2 demical places : 1 6. Return on common stockholders' equity enter percentages rounded to 2 demical places %
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Selected financial information for CraneCorporation as of December are presented below.
|
2014
|
2013
|
|||
|---|---|---|---|---|
|
Current assets
|
$82,640
|
$63,140
|
||
|
Current liabilities
|
34,440
|
28,700
|
||
|
|
98,400
|
86,920
|
||
|
Total assets
|
246,000
|
221,400
|
Net sales and net income for 2014 were $369,000 and $29,520 respectively. Dividends of $3,280 were declared for common stockholders and $4,920for preferred shareholders in 2014. Preferred stockholders' equity is equal to 10% of total stockholders' equity.
Compute the indicated ratios at December 31, 2014, or for the year ended December 31, 2014, as appropriate. (Round answers to 2 decimal places, e.g. 2.12.)
|
1.
|
Return on assets
|
enter percentages rounded to 2 demical places
|
%
|
||
|---|---|---|---|---|---|
|
2.
|
Profit margin
|
enter percentages rounded to 2 demical places
|
%
|
||
|
3.
|
Payout ratio
|
enter percentages rounded to 2 demical places
|
%
|
||
|
4.
|
Debt assets ratio
|
enter percentages rounded to 2 demical places
|
%
|
||
|
5.
|
|
enter ratio rounded to 2 demical places
|
: 1
|
||
|
6.
|
Return on common stockholders' equity
|
enter percentages rounded to 2 demical places
|
%
|
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