The current year financial statements for Blue Water Company and Prime Fish Company are presented below. 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 $ 42,000 43,000 94,000 155,000 85,000 $ 419,000 $ 94,000 72,000 155,000 30,000 68,000 $ 419,000 $ 432,000 (236,000) (163,000) $ 33,000 $23.0 30% $ 34,000 Prime Fish $ 20,000 34,000 46,000 413,000 315,000 $ 828,000 $ 64,000 62,000 522,000 107,000 73,000 $ 828,000 $ 792,000 (401,000) (312,000) $ 79,000 $ 25 30% $ 153,000 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.
The current year financial statements for Blue Water Company and Prime Fish Company are presented below. 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 $ 42,000 43,000 94,000 155,000 85,000 $ 419,000 $ 94,000 72,000 155,000 30,000 68,000 $ 419,000 $ 432,000 (236,000) (163,000) $ 33,000 $23.0 30% $ 34,000 Prime Fish $ 20,000 34,000 46,000 413,000 315,000 $ 828,000 $ 64,000 62,000 522,000 107,000 73,000 $ 828,000 $ 792,000 (401,000) (312,000) $ 79,000 $ 25 30% $ 153,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The current year financial statements for Blue Water Company and Prime Fish Company are presented below.
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
$ 42,000
43,000
94,000
155,000
85,000
$ 419,000
$ 94,000
72,000
155,000
30,000
68,000
$ 419,000
$ 432,000
(236,000)
(163,000)
$ 33,000
$ 23.0
30%
$ 34,000
Prime Fish
$ 20,000
34,000
46,000
413,000
315,000
$ 828,000
$ 64,000
62,000
522,000
107,000
73,000
$ 828,000
$ 792,000
(401,000)
(312,000)
$ 79,000
$ 25
30%
$ 153,000
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.
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 (l.e. 0.1234 should be entered as 12.34).
Profitability ratios:
1. Return on equity ratio
2. Return on assets ratio
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
****
%
%
%6
%6
%6
PRIME FISH
COMPANY
%
%
%
%6
%
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