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: 18%) Capital stock ($10 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders' equity $ 485,400 Income statement Sales revenue (1/3 on credit) Cost of goods sold $ 444,000 (240,000) (161,400) $ 42,600 Blue Water Prine Fish $ 41,200 39,000 98,000 $ 20,800 143,000 84,200 $ 485,400 $ 98,000 66,400 149,400 29,200 62,400 31,600 41,200 483,400 387,000 $ 884,000 $ 52,000 60,400 514,000 106,200 71,400 $ 884,000 $ 800,000 (400,200) (311,200) $ 88,600 $ 22.2 38% $ 17 30% Dividends declared and paid in current year $ 33,200 $ 149,000 Operating expenses Net income Other data Per share stock price at end of current year Average income tax rate 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: Note: Round your Intermediate calculations and final answers to 2 decimal places. Enter percentage answers rounded to 2 decimal places (1.e. 0.1234 should be entered as 12.34). Profitability ratios: Ratio 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 PRIME FISH COMPANY % % % % % % % % % %

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: 18%) Capital stock ($10 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders' equity $ 485,400 Income statement Sales revenue (1/3 on credit) Cost of goods sold $ 444,000 (240,000) (161,400) $ 42,600 Blue Water Prine Fish $ 41,200 39,000 98,000 $ 20,800 143,000 84,200 $ 485,400 $ 98,000 66,400 149,400 29,200 62,400 31,600 41,200 483,400 387,000 $ 884,000 $ 52,000 60,400 514,000 106,200 71,400 $ 884,000 $ 800,000 (400,200) (311,200) $ 88,600 $ 22.2 38% $ 17 30% Dividends declared and paid in current year $ 33,200 $ 149,000 Operating expenses Net income Other data Per share stock price at end of current year Average income tax rate 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: Note: Round your Intermediate calculations and final answers to 2 decimal places. Enter percentage answers rounded to 2 decimal places (1.e. 0.1234 should be entered as 12.34). Profitability ratios: Ratio 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 PRIME FISH COMPANY % % % % % % % % % %

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 54CE

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