TABLE 4-4 Moderately Large Corporation Consolidated Balance Sheet Moderately Large Corporation Consolidaed Balance Sheet (in thousands except share data) Fiscal Year Ended Dec. 31, 2013 Dec. 31, 2012 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Inventories Prepaid expenses and other current assets Deferred income taxes, net Total current assets Property, plant and equipment, net Other assets TOTAL ASSETS $1,369 1,008 1,489 157 44 4,066 3,137 168 $7,371 $1,427 876 481 126 40 2,950 2,287 161 $5,398 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued compensation and related costs Accrued taxes $429 104 132 $242 98 141 Current portion of long-term debt Total current liabilities Long-term debt Total liabilities 89 754 2,630 3,384 82 563 1,830 2,392 Shareholders' equity: Common stock (So.1 par value)-authorized, 4,000,000 shares; issued and outstanding, 3,500,000. Paid-in capital in excess of par Retained earnings Total shareholders' equity 350 350 2,415 1,222 3,987 $7,371 2,415 241 3,006 $5,398 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
TABLE 4-4 Moderately Large Corporation Consolidated Balance Sheet Moderately Large Corporation Consolidaed Balance Sheet (in thousands except share data) Fiscal Year Ended Dec. 31, 2013 Dec. 31, 2012 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Inventories Prepaid expenses and other current assets Deferred income taxes, net Total current assets Property, plant and equipment, net Other assets TOTAL ASSETS $1,369 1,008 1,489 157 44 4,066 3,137 168 $7,371 $1,427 876 481 126 40 2,950 2,287 161 $5,398 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued compensation and related costs Accrued taxes $429 104 132 $242 98 141 Current portion of long-term debt Total current liabilities Long-term debt Total liabilities 89 754 2,630 3,384 82 563 1,830 2,392 Shareholders' equity: Common stock (So.1 par value)-authorized, 4,000,000 shares; issued and outstanding, 3,500,000. Paid-in capital in excess of par Retained earnings Total shareholders' equity 350 350 2,415 1,222 3,987 $7,371 2,415 241 3,006 $5,398 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter13: Financial Statement Analysis
Section: Chapter Questions
Problem 13.10E
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Question
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Given the balance sheet for the Moderately Large Corporation (Table 4–4), answer the following:
- For each year, calculate the following ratios: current, quick, debt-to-asset, and debt-to-equity.
- In a written explanation, state what each ratio means. c. Compare the ratios for the 2-year period and determine if the MLC is suf-ficiently liquid.
- How well is the MLC managing its debt?
Transcribed Image Text:TABLE 4-4 Moderately Large Corporation Consolidated Balance Sheet
Moderately Large Corporation Consolidaed Balance Sheet
(in thousands except share data)
Fiscal Year Ended
Dec. 31, 2013 Dec. 31, 2012
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net
$1,427
876
$1,369
1,008
1,489
157
Inventories
Prepaid expenses and other current assets
Deferred income taxes, net
Total current assets
Property, plant and equipment, net
Other assets
TOTAL ASSETS
44
4,066
3,137
168
$7,371
481
126
40
2,950
2,287
161
$5,398
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
Accrued compensation and related costs
Accrued taxes
Current portion of long-term debt
Total current liabilities
Long-term debt
Total liabilities
$429
104
132
$242
98
141
89
754
2,630
3,384
82
563
1,830
2,392
Shareholders' equity:
Common stock (S0.1 par value)-authorized,
4,000,000 shares; issued and outstanding, 3,500,000.
Paid-in capital in excess of par
Retained earnings
Total shareholders' equity
350
350
2,415
1,222
3,987
$7,371
2,415
241
3,006
$5,398
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Expert Solution
Step 1
Ratio analysis is one of the most common ways used to determine the company’s financial performance. Liquidity ratios are the ratios that help in determining company’s ability to pay off its short term debt obligations.
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