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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.)

FINANCIAL ACCOUNTING
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 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: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.)
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 %
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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