The current year financial statements for Blue Water Company and Prime Fish Company are presented below. Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blue Water is more conservative, and as its president has said, “We avoid what we consider to be undue risk.” Neither company is publicly held. Required: 1. Using year-end balances for all ratios, compute the following ratios:
The current year financial statements for Blue Water Company and Prime Fish Company are presented below. Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blue Water is more conservative, and as its president has said, “We avoid what we consider to be undue risk.” Neither company is publicly held. Required: 1. Using year-end balances for all ratios, compute the following ratios:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The current year financial statements for Blue Water Company and Prime Fish Company are presented below.
Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blue Water is more conservative, and as its president has said, “We avoid what we consider to be undue risk.” Neither company is publicly held.
Required:
1. Using year-end balances for all ratios, compute the following ratios:

Transcribed Image Text:Required:
1. Using year-end balances for all ratios, compute the following ratios:
Note: Round your intermediate calculations and final answers to 2 decimal places. Enter percentage answers rounded
to 2 decimal places (i.e. 0.1234 should be entered as 12.34).
Ratio
Profitability ratios:
1. Return on equity ratio
2. Return on assets ratio
3. Gross profit margin
4. Net profit margin ratio
5. Earnings per share ratio
Asset turnover ratios:
6. Total asset turnover ratio
7. Fixed asset turnover ratio
8. Receivable turnover ratio
9. Inventory turnover ratio
Liquidity ratios:
10. Current ratio
11. Quick ratio
12. Cash ratio
Solvency ratios:
13. Debt to equity ratio
Market ratios:
14. Price earnings ratio
15. Dividend yield ratio
BLUE WATER
COMPANY
X
%
46.09 %
× %
1.80
0.80
0.41
X
X
1.11
3.19
3.92
2.43 ✔
0.69✔
%
X X
X%
PRIME FISH
COMPANY
50.12
10.00
1.06
* * > * *Ⓡ
1.01
2.00✔
8.62✔
0.43
X%
0.16
X%
1.88✔
X %
3 3 3
%
XX
X%

Transcribed Image Text:Balance sheet
Cash
Accounts receivable (net)
Inventory
Property & equipment (net)
Other assets
Total assets
Current liabilities
Long-term debt (interest rate: 10% )
Capital stock ($10 par value)
Additional paid-in capital
Retained earnings
Total liabilities and stockholders' equity
Income statement
Sales revenue (1/3 on credit)
Cost of goods sold
Operating expenses
Net income
Other data
Per share stock price at end of current year
Average income tax rate.
Dividends declared and paid in current year
Blue Water Prime Fish
$ 41,000
38,000
99,000
140,000
84,000
$ 402,000
$ 99,000
65,000
148,000
29,000
61,000
$ 402,000
$ 447,000
(241,000)
(161,000)
$ 45,000
$ 22
30%
$ 33,000
$ 21,000
31,000
40,000
401,000
305,000
$ 798,000
$ 49,000
60,000
512,000
106,000
71,000
$ 798,000
$ 802,000
(400,000)
(311,000)
$ 91,000
$ 15
30%
$ 148,000
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