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Show your work (use of formula, etc.) in solving the problems. Provide your answers/solutions in the answer space provided below. Answer all questions. 1. Data for Cary Company and its industry average follow. Balance Sheet as of Dec. 31 (Millions of Dollars) Assets Liabilities and Owner's Equity 2020 2020 Current Liabilities 75,500 Accts payable Current Assets Cash 127,000 A/R 330,000 Notes payable 84,000 Inventories 255,500 Other current liabilities 115,000 Total CA 661,000 Total CL 326,000 Long-term debt 282,500 Total Liabilities Common Equity 943,500 |Total Liabilities and Equity Net fixed assets 260,500 586,500 Net plant and equipment 357,000 Total Assets 943,500 Income statement for the year ending December 31 2020 Sales 1,800,500 COGS (1,458,000) Gross profit Fixed operating expenses except depreciation 342,500 (210,000) Earnings before interest, taxes, depre and amort (EBITDA) 132,500 Depreciation (40,000) EBIT (Opering income) 92,500 Interest expense (44,000) EBT (Taxable income) 48,500 Taxes (40%) (19,400) Net income 29,100

Show your work (use of formula, etc.) in solving the problems. Provide your answers/solutions in the answer space provided below. Answer all questions. 1. Data for Cary Company and its industry average follow. Balance Sheet as of Dec. 31 (Millions of Dollars) Assets Liabilities and Owner's Equity 2020 2020 Current Liabilities 75,500 Accts payable Current Assets Cash 127,000 A/R 330,000 Notes payable 84,000 Inventories 255,500 Other current liabilities 115,000 Total CA 661,000 Total CL 326,000 Long-term debt 282,500 Total Liabilities Common Equity 943,500 |Total Liabilities and Equity Net fixed assets 260,500 586,500 Net plant and equipment 357,000 Total Assets 943,500 Income statement for the year ending December 31 2020 Sales 1,800,500 COGS (1,458,000) Gross profit Fixed operating expenses except depreciation 342,500 (210,000) Earnings before interest, taxes, depre and amort (EBITDA) 132,500 Depreciation (40,000) EBIT (Opering income) 92,500 Interest expense (44,000) EBT (Taxable income) 48,500 Taxes (40%) (19,400) Net income 29,100

FINANCIAL ACCOUNTING
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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Show your work (use of formula, etc.) in solving the problems. Provide your answers/solutions in the answer space provided below. Answer all questions. 1. Data for Cary Company and its industry average follow. Balance Sheet as of Dec. 31 (Millions of Dollars) Assets Liabilities and Owner's Equity 2020 2020 Current Assets Current Liabilities Accts payable Notes payable Cash 75,500 127,000 A/R 330,000 84,000 Inventories 255,500 Other current liabilities 115,000 Total CA 661,000 Total CL 326,000 Long-term debt 282,500 Total Liabilities Common Equity 943,500 Total Liabilities and Equity Net fixed assets 260,500 Net plant and equipment 586,500 357,000 Total Assets 943,500 Income statement for the year ending December 31 2020 Sales 1,800,500 COGS (1,458,000) Gross profit 342,500 (210,000) Fixed operating expenses except depreciation Earnings before interest, taxes, depre and amort (EBITDA) Depreciation EBIT (Opering income) 132,500 (40,000) 92,500 Interest expense (44,000) EBT (Taxable income) 48,500 Taxes (40%) (19,400) Net income 29,100
Transcribed Image Text:Show your work (use of formula, etc.) in solving the problems. Provide your answers/solutions in the answer space provided below. Answer all questions. 1. Data for Cary Company and its industry average follow. Balance Sheet as of Dec. 31 (Millions of Dollars) Assets Liabilities and Owner's Equity 2020 2020 Current Assets Current Liabilities Accts payable Notes payable Cash 75,500 127,000 A/R 330,000 84,000 Inventories 255,500 Other current liabilities 115,000 Total CA 661,000 Total CL 326,000 Long-term debt 282,500 Total Liabilities Common Equity 943,500 Total Liabilities and Equity Net fixed assets 260,500 Net plant and equipment 586,500 357,000 Total Assets 943,500 Income statement for the year ending December 31 2020 Sales 1,800,500 COGS (1,458,000) Gross profit 342,500 (210,000) Fixed operating expenses except depreciation Earnings before interest, taxes, depre and amort (EBITDA) Depreciation EBIT (Opering income) 132,500 (40,000) 92,500 Interest expense (44,000) EBT (Taxable income) 48,500 Taxes (40%) (19,400) Net income 29,100
a. Calculate the indicated ratios for Cary. Industry Ratio Cary Average Current ratio 2.0 X Days sales outstanding 35 days Inventory turnover 5.6 X Total assets turnover 3.0 X Net profit margin 1.2% Return on assets (ROA) 3.60% Return on equity (ROE) 9.00% Debt ratio 60% b. Construct the DuPont ROA equations for both Cary and the industry. DuPont ROA (Cary) = DuPont ROA (Industry) = c. Outline Cary's strengths and weaknesses as revealed by your analysis.
Transcribed Image Text:a. Calculate the indicated ratios for Cary. Industry Ratio Cary Average Current ratio 2.0 X Days sales outstanding 35 days Inventory turnover 5.6 X Total assets turnover 3.0 X Net profit margin 1.2% Return on assets (ROA) 3.60% Return on equity (ROE) 9.00% Debt ratio 60% b. Construct the DuPont ROA equations for both Cary and the industry. DuPont ROA (Cary) = DuPont ROA (Industry) = c. Outline Cary's strengths and weaknesses as revealed by your analysis.
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