The following financial statements apply to Finch Company: Year 2 Year 1 $219,100 $182,800 Revenues Expenses Cost of goods sold Selling expenses General and administrative expenses Interest expense Income tax expense Total expenses Net income Assets Current assets Cash Marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Plant and equipment (net) Intangibles Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Accounts payable Other Total current liabilities Bonds payable Total liabilities Stockholders' equity Common stock (43,000 shares) 124,400 101, 100 19,700 17,700 10,000 9,000 1,700 16,900 146,400 $36,400 Total liabilities and stockholders' equity 1,700 20,100 175,900 $ 43,200 $ 4,800 $ 7,200 2,800 36,600 101,600 3,900 149,700 106,400 21,500 $277,600 54,300 64,300 118, 600 114,900 44,100 Retained earnings Total stockholders' equity 159,000 $277,600 2,800 31,100 94, 100 2,900 138, 100 106,400 $ 38,500 $ 34,200 15,800 16, 200 0 $244,500 50,400 65,300 115,700 114,900 13,900 128,800 $244,500 Required Calculate the following ratios for Year 1 and Year 2. Since opening balance numbers are not presented do not use averages when calculating the ratios for Year 1. Instead, use the number presented on the Year 1 balance sheet. a. Net margin. (Round your answers to 2 decimal places.) b. Return on investment. (Round your answers to 2 decimal places.) c. Return on equity. (Round your answers to 2 decimal places.) d. Earnings per share. (Round your answers to 2 decimal places.) e. Price-earnings ratio (market prices at the end of Year 1 and Year 2 were $6.04 and $4.96, respectively). (Round your intermediate calculations and final answers to 2 decimal places.) f. Book value per share of common stock. (Round your answers to 2 decimal places.)
The following financial statements apply to Finch Company: Year 2 Year 1 $219,100 $182,800 Revenues Expenses Cost of goods sold Selling expenses General and administrative expenses Interest expense Income tax expense Total expenses Net income Assets Current assets Cash Marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Plant and equipment (net) Intangibles Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Accounts payable Other Total current liabilities Bonds payable Total liabilities Stockholders' equity Common stock (43,000 shares) 124,400 101, 100 19,700 17,700 10,000 9,000 1,700 16,900 146,400 $36,400 Total liabilities and stockholders' equity 1,700 20,100 175,900 $ 43,200 $ 4,800 $ 7,200 2,800 36,600 101,600 3,900 149,700 106,400 21,500 $277,600 54,300 64,300 118, 600 114,900 44,100 Retained earnings Total stockholders' equity 159,000 $277,600 2,800 31,100 94, 100 2,900 138, 100 106,400 $ 38,500 $ 34,200 15,800 16, 200 0 $244,500 50,400 65,300 115,700 114,900 13,900 128,800 $244,500 Required Calculate the following ratios for Year 1 and Year 2. Since opening balance numbers are not presented do not use averages when calculating the ratios for Year 1. Instead, use the number presented on the Year 1 balance sheet. a. Net margin. (Round your answers to 2 decimal places.) b. Return on investment. (Round your answers to 2 decimal places.) c. Return on equity. (Round your answers to 2 decimal places.) d. Earnings per share. (Round your answers to 2 decimal places.) e. Price-earnings ratio (market prices at the end of Year 1 and Year 2 were $6.04 and $4.96, respectively). (Round your intermediate calculations and final answers to 2 decimal places.) f. Book value per share of common stock. (Round your answers to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:The following financial statements apply to Finch Company:
Revenues
Expenses
Cost of goods sold
Selling expenses
General and administrative
expenses
Interest expense
Income tax expense
Total expenses
Net income
Assets
Current assets.
Cash
Marketable securities
Accounts receivable
Inventories
Prepaid expenses
Total current assets
Plant and equipment (net)
Intangibles
Total assets
Liabilities and Stockholders'
Equity
Liabilities
Current liabilities
Accounts payable
Other
Total current liabilities
Bonds payable
Total liabilities
Stockholders' equity
Common stock (43,000 shares)
Retained earnings
Total stockholders' equity
Total liabilities and
stockholders' equity
Year 2
$219, 100
124,400
101, 100
19,700
17,700
10,000
9,000
1,700
1,700
20, 100
16,900
175,900
146,400
$ 43,200 $36,400
$ 4,800 $ 7,200
2,800
2,800
36,600
101,600
3,900
149,700
106,400
21,500
$277,600
$38,500
15,800
Year 1
$182, 800
54,300
64,300
118,600
114,900
44, 100
159,000
$277,600
31, 100
94, 100
2,900
138, 100
106,400
0
$244,500
$ 34,200
16, 200
50,400
65,300
115,700
114,900
13,900
128,800
$244,500
Required
Calculate the following ratios for Year 1 and Year 2. Since opening balance numbers are not presented do not use
averages when calculating the ratios for Year 1. Instead, use the number presented on the Year 1 balance sheet.
a. Net margin. (Round your answers to 2 decimal places.)
b. Return on investment. (Round your answers to 2 decimal places.)
c. Return on equity. (Round your answers to 2 decimal places.)
d. Earnings per share. (Round your answers to 2 decimal places.)
e. Price-earnings ratio (market prices at the end of Year 1 and Year 2 were $6.04 and $4.96, respectively). (Round your
intermediate calculations and final answers to 2 decimal places.)
f. Book value per share of common stock. (Round your answers to 2 decimal places.)
g. Times interest earned. Exclude extraordinary income in the calculation as they cannot be expected to recur and,
therefore, will not be available to satisfy future interest payments. (Round your answers to 2 decimal places.)
h. Working capital.
i. Current ratio. (Round your answers to 2 decimal places.)
j. Quick (acid-test) ratio. (Round your answers to 2 decimal places.)
k. Accounts receivable turnover. (Round your answers to 2 decimal places.)
I. Inventory turnover. (Round your answers to 2 decimal places.)
m. Debt-to-equity ratio. (Round your answers to 2 decimal places.)
n. Debt-to-assets ratio. (Round your answers to the nearest whole percent.)
Transcribed Image Text:a. Net margin
b. Return on investment
c. Return on equity
d. Earnings per share
e. Price-earnings ratio
f.
Book value per share of common
stock
g. Times interest earned
h. Working capital
i. Current ratio
j. Quick (acid-test) ratio
k. Accounts receivable turnover
I. Inventory turnover
m. Debt-to-equity ratio
n. Debt-to-assets ratio
Year 2
%
%
%
times
times
times
times
%
Year 1
%
%
%
times
times
times
times
%
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