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: 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 roundedto 2 decimal places (i.e. 0.1234 should be entered as 12.34).RatioProfitability ratios:1. Return on equity ratio2. Return on assets ratio3. Gross profit margin4. Net profit margin ratio5. Earnings per share ratioAsset turnover ratios:6. Total asset turnover ratio7. Fixed asset turnover ratio8. Receivable turnover ratio9. Inventory turnover ratioLiquidity ratios:10. Current ratio11. Quick ratio12. Cash ratioSolvency ratios:13. Debt to equity ratioMarket ratios:14. Price earnings ratio15. Dividend yield ratioBLUE WATERCOMPANYX%46.09 %× %1.800.800.41XX1.113.193.922.43 ✔0.69✔%X XX%PRIME FISHCOMPANY50.1210.001.06* * > * *Ⓡ1.012.00✔8.62✔0.43X%0.16X%1.88✔X %3 3 3%XXX% Balance sheetCashAccounts receivable (net)InventoryProperty & equipment (net)Other assetsTotal assetsCurrent liabilitiesLong-term debt (interest rate: 10% )Capital stock ($10 par value)Additional paid-in capitalRetained earningsTotal liabilities and stockholders' equityIncome statementSales revenue (1/3 on credit)Cost of goods soldOperating expensesNet incomeOther dataPer share stock price at end of current yearAverage income tax rate.Dividends declared and paid in current yearBlue Water Prime Fish$ 41,00038,00099,000140,00084,000$ 402,000$ 99,00065,000148,00029,00061,000$ 402,000$ 447,000(241,000)(161,000)$ 45,000$ 2230%$ 33,000$ 21,00031,00040,000401,000305,000$ 798,000$ 49,00060,000512,000106,00071,000$ 798,000$ 802,000(400,000)(311,000)$ 91,000$ 1530%$ 148,000

Ratio analysis is a technique for assaying and interpreting fiscal statements. It's the process of…

Answered: The current year financial statements…

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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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:

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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