N12.Account The financial statements for Armstrong and Blair companies are summarized here:ArmstrongCompanyBalance SheetCashAccounts Receivable, NetInventoryEquipment, NetOther AssetsTotal AssetsCurrent LiabilitiesNote Payable (long-term)Total LiabilitiesCommon Stock (par $10)Additional Paid-in CapitalRetained EarningsTotal Liabilities and Stockholders' EquityIncome StatementSales RevenueCost of Goods SoldOther ExpensesNet IncomeOther DataEstimated value of each share at end of yearSelected Data from Previous YearAccounts Receivable, NetInventoryEquipment, NetNote Payable (long-term)Total Stockholders' Equity$ 42,00047,000114,000194,00052,000$449,000$114,00074,000188,000157,00037,00067,000$449,000$471,000252,000167,000$ 52,000$$ 27,00099,000194,00074,000238,00019BlairCompany$ 29,00037,00054,000314,000415,000$849,000$ 64,000384,000448,000207,000117,00077,000$849,000$831,000412,000322,000$ 97,000$ 26$ 45,00052,000314,00077,000447,000 The companies are in the same line of business and are direct competitors in a large metropolitan area.Both have been in business approximately 10 years and each has had steady growth. Despite thesesimilarities, the management of each has a different viewpoint in many respects. Blair is more conservative,and as its president said, "We avoid what we consider to be undue risk." Both companies use straight-linedepreciation, but Blair estimates slightly shorter useful lives than Armstrong. No shares were issued in thecurrent year and neither company is publicly held. Blair Company has an annual audit by a CPA, butArmstrong Company does not. Assume the end-of-year total assets and net equipment balancesapproximate the year's average and all sales are on account.Required:1. Calculate the following ratios.TIP: To calculate EPS, use the balance in Common Stock to determine the number of sharesoutstanding. Common Stock equals the par value per share times the number of shares. (Use 365 daysin a year. Round your intermediate calculations and your final answers to 2 decimal places.)RatioTests of Profitability:1. Net Profit Margin2. Gross Profit Percentage3. Fixed Asset Turnover4. Return on Equity5. Earnings per Share6. Price/Earnings RatioTests of Liquidity:7. Receivables TurnoverDays to Collect8. Inventory TurnoverDays to Sell9. Current RatioTests of Solvency:10. Debt-to-AssetsArmstrongCompany%%%BlairCompany%%%

Financial statement analysis applies analytical tools to financial statements for the interpretation…

The financial statements for Armstrong and Blair companies are summarized here: Armstrong Company Balance Sheet Cash Accounts Receivable, Net Inventory Equipment, Net Other Assets Total Assets Current Liabilities Note Payable (long-term) Total Liabilities Common Stock (par $10) Additional Paid-in Capital Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Sales Revenue Cost of Goods Sold Other Expenses Net Income Other Data Estimated value of each share at end of year Selected Data from Previous Year Accounts Receivable, Net Inventory Equipment, Net Note Payable (long-term) Total Stockholders' Equity $ 42,000 47,000 114,000 194,000 52,000 $449,000 $114,000 74,000 188,000 157,000 37,000 67,000 $449,000 $471,000 252,000 167,000 $ 52,000 $ 19 $ 27,000 99,000 194,000 74,000 238,000 Blair Company $ 29,000 37,000 54,000 314,000 415,000 $849,000 $ 64,000 384,000 448,000 207,000 117,000 77,000 $849,000 $831,000 412,000 322,000 $ 97,000 $ 26 $ 45,000 52,000 314,000 77,000 447,000

The financial statements for Armstrong and Blair companies are summarized here: Armstrong Company Balance Sheet Cash Accounts Receivable, Net Inventory Equipment, Net Other Assets Total Assets Current Liabilities Note Payable (long-term) Total Liabilities Common Stock (par $10) Additional Paid-in Capital Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Sales Revenue Cost of Goods Sold Other Expenses Net Income Other Data Estimated value of each share at end of year Selected Data from Previous Year Accounts Receivable, Net Inventory Equipment, Net Note Payable (long-term) Total Stockholders' Equity $ 42,000 47,000 114,000 194,000 52,000 $449,000 $114,000 74,000 188,000 157,000 37,000 67,000 $449,000 $471,000 252,000 167,000 $ 52,000 $ 19 $ 27,000 99,000 194,000 74,000 238,000 Blair Company $ 29,000 37,000 54,000 314,000 415,000 $849,000 $ 64,000 384,000 448,000 207,000 117,000 77,000 $849,000 $831,000 412,000 322,000 $ 97,000 $ 26 $ 45,000 52,000 314,000 77,000 447,000

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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