The following financial statements apply to Jordan Company: Year 2 Year 1 $ 180,300 Revenues $ 220,000 Expenses Cost of goods sold 125,200 102,300 Selling expenses 21,000 19,000 General and administrative expenses 10,500 9,500 Interest expense 1,100 1,100 Income tax expense 19,200 17,200 Total expenses 177,000 149, 100 Net income $ 43,000 $ 31,200 Assets Current assets Cash $ 5,800 $ 7,500 1,700 1,700 Marketable securities Accounts receivable Inventories 35,300 30,800 101,500 94,000 Prepaid expenses 4,700 3,700 Total current assets 149,000 137,700 Plant and equipment (net) 105,400 105,400 22,000 Intangibles 0 Total assets $ 276,400 $ 243,100 Liabilities and Stockholders' Equity Liabilities Current liabilities Accounts payable $ 39,000 $ 34,000 Other 15,800 16,100 Total current liabilities 54,800 50, 100 Bonds payable 65,700 66,700 Total liabilities 120,500 116,800 Stockholders' equity 114,100 114,100 Common stock (49,000 shares) Retained earnings 41,800 12,200 Total stockholders' equity 155,900 126,300 Total liabilities and stockholders' equity $ 276,400 $ 243,100

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 Jordan Company:
Year 2
Year 1
Revenues
$ 220,000
$ 180,300
Expenses
Cost of goods sold
125,200
102,300
Selling expenses
21,000
19,000
General and administrative expenses
10,500
9,500
Interest expense
1,100
1,100
Income tax expense
19, 200
17, 200
Total expenses
177,000
149, 100
Net income
$ 43,000 $
31, 200
Assets
Current assets
Cash
$
$
7,500
5,800
1,700
1,700
Marketable securities
Accounts receivable
Inventories
35,300
30,800
101,500
94,000
Prepaid expenses
4,700
3,700
Total current assets
149,000
137,700
Plant and equipment (net)
105,400
105,400
Intangibles
22,000
0
Total assets
$ 276,400 $ 243,100
Liabilities and Stockholders' Equity
Liabilities
Current liabilities
Accounts payable
$ 39,000
$ 34,000
Other
15,800
16,100
Total current liabilities
54,800
50, 100
Bonds payable
65,700
66,700
Total liabilities
120,500
116,800
Stockholders' equity
114,100
114, 100
Common stock (49,000 shares)
Retained earnings
41,800
12,200
Total stockholders' equity
155,900
126,300
Total liabilities and stockholders' equity
$ 276,400
$ 243,100
Transcribed Image Text:The following financial statements apply to Jordan Company: Year 2 Year 1 Revenues $ 220,000 $ 180,300 Expenses Cost of goods sold 125,200 102,300 Selling expenses 21,000 19,000 General and administrative expenses 10,500 9,500 Interest expense 1,100 1,100 Income tax expense 19, 200 17, 200 Total expenses 177,000 149, 100 Net income $ 43,000 $ 31, 200 Assets Current assets Cash $ $ 7,500 5,800 1,700 1,700 Marketable securities Accounts receivable Inventories 35,300 30,800 101,500 94,000 Prepaid expenses 4,700 3,700 Total current assets 149,000 137,700 Plant and equipment (net) 105,400 105,400 Intangibles 22,000 0 Total assets $ 276,400 $ 243,100 Liabilities and Stockholders' Equity Liabilities Current liabilities Accounts payable $ 39,000 $ 34,000 Other 15,800 16,100 Total current liabilities 54,800 50, 100 Bonds payable 65,700 66,700 Total liabilities 120,500 116,800 Stockholders' equity 114,100 114, 100 Common stock (49,000 shares) Retained earnings 41,800 12,200 Total stockholders' equity 155,900 126,300 Total liabilities and stockholders' equity $ 276,400 $ 243,100
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 $5.95 and $4.94, 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.)
Year 2
Year 1
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
%
%
%
times
times
times
times
%
%
%
%
times
times
times
times
%
Transcribed Image Text: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 $5.95 and $4.94, 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.) Year 2 Year 1 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 % % % times times times times % % % % times times times times %
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