The following financial statements belong to the International Carrier Services company, for the closing of its fiscal year, as of July 31, 2019. International Carrier Services Income Statement for the Fiscal Year Ended July 31, 2019 Net sales $51,407 Cost of products sold 25,076 Gross margin $26,331 Marketing, research, administrative exp. 15,746 Depreciation 758 Operating income (loss) $ 9,827 Interest expense 477 Earnings (loss) before income taxes 9,350 Income taxes 2,869 Net income (loss) $ 6,481 International Carrier Services Balance Sheet as of 7/31/2019 Assets Liabilities and Stockholders’ Equity Cash and marketable securities $ 5,469 Accounts payable $ 3,617 Investment securities 423 Accrued and other liabilities 7,689 Accounts receivable 4,062 Taxes payable 2,554 Total inventories 4,400 Debt due within one year 8,287 Prepaid expenses & other receivables 2,761 Total current liabilities $22,147 Other non-current assets 1,925 Total current assets $19,040 Long-term debt 12,554 Deferred income taxes 2,261 Property, plant, and equip., at cost 25,304 Other non-current liabilities 2,808 Less: Accumulated depreciation 11,196 Total liabilities $39,770 Net plant and equipment 14,108 Net goodwill & other intangible assets 23,900 Convertible Class A preferred stock 1,526 Total Fixed Assets 38,008 Common stock 2,141 Retained earnings 13,611 Total stockholders’ equity (deficit) $17,278 Total Assets $57,048 Total Liabilities and Stockholders’ Equity $57,048 Calculate the financial ratios for the International Carrier Services company and compare them to the financial ratios provided for the trucking industry to which the evaluated company belongs. Ratio International Carrier Services Industry Average Current ratio …. 2.05 Quick ratio …. 0.78 Gross margin …. 23.9% Profit margin …. 12.3% Debt ratio …. 0.23 Long-term debt to equity …. 0.98 Time interest-earned ratio …. 5.62 ROA …. 5.3% ROE …. 18.8% Based on the results of the previous year and your evaluation, propose the adjustments or strategies that you understand the company must carry out in order to be in a better financial position. Would you invest in stocks or bonds of this company? Explain.

The following financial statements belong to the International Carrier Services company, for the closing of its fiscal year, as of July 31, 2019. International Carrier Services Income Statement for the Fiscal Year Ended July 31, 2019 Net sales $51,407 Cost of products sold 25,076 Gross margin $26,331 Marketing, research, administrative exp. 15,746 Depreciation 758 Operating income (loss) $ 9,827 Interest expense 477 Earnings (loss) before income taxes 9,350 Income taxes 2,869 Net income (loss) $ 6,481 International Carrier Services Balance Sheet as of 7/31/2019 Assets Liabilities and Stockholders’ Equity Cash and marketable securities $ 5,469 Accounts payable $ 3,617 Investment securities 423 Accrued and other liabilities 7,689 Accounts receivable 4,062 Taxes payable 2,554 Total inventories 4,400 Debt due within one year 8,287 Prepaid expenses & other receivables 2,761 Total current liabilities $22,147 Other non-current assets 1,925 Total current assets $19,040 Long-term debt 12,554 Deferred income taxes 2,261 Property, plant, and equip., at cost 25,304 Other non-current liabilities 2,808 Less: Accumulated depreciation 11,196 Total liabilities $39,770 Net plant and equipment 14,108 Net goodwill & other intangible assets 23,900 Convertible Class A preferred stock 1,526 Total Fixed Assets 38,008 Common stock 2,141 Retained earnings 13,611 Total stockholders’ equity (deficit) $17,278 Total Assets $57,048 Total Liabilities and Stockholders’ Equity $57,048 Calculate the financial ratios for the International Carrier Services company and compare them to the financial ratios provided for the trucking industry to which the evaluated company belongs. Ratio International Carrier Services Industry Average Current ratio …. 2.05 Quick ratio …. 0.78 Gross margin …. 23.9% Profit margin …. 12.3% Debt ratio …. 0.23 Long-term debt to equity …. 0.98 Time interest-earned ratio …. 5.62 ROA …. 5.3% ROE …. 18.8% Based on the results of the previous year and your evaluation, propose the adjustments or strategies that you understand the company must carry out in order to be in a better financial position. Would you invest in stocks or bonds of this company? Explain.

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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Question

The following financial statements belong to the International Carrier Services company, for the closing of its fiscal year, as of July 31, 2019.

International Carrier Services Income Statement for the Fiscal Year Ended July 31, 2019
Net sales	$51,407
Cost of products sold	25,076
Gross margin	$26,331
Marketing, research, administrative exp.	15,746
Depreciation	758
Operating income (loss)	$ 9,827
Interest expense	477
Earnings (loss) before income taxes	9,350
Income taxes	2,869
Net income (loss)	$ 6,481

International Carrier Services Balance Sheet as of 7/31/2019
Assets		Liabilities and Stockholders’ Equity
Cash and marketable securities	$ 5,469	Accounts payable	$ 3,617
Investment securities	423	Accrued and other liabilities	7,689
Accounts receivable	4,062	Taxes payable	2,554
Total inventories	4,400	Debt due within one year	8,287
Prepaid expenses & other receivables	2,761	Total current liabilities	$22,147
Other non-current assets	1,925
Total current assets	$19,040	Long-term debt	12,554
		Deferred income taxes	2,261
Property, plant, and equip., at cost	25,304	Other non-current liabilities	2,808
Less: Accumulated depreciation	11,196	Total liabilities	$39,770
Net plant and equipment	14,108
Net goodwill & other intangible assets	23,900	Convertible Class A preferred stock	1,526
Total Fixed Assets	38,008	Common stock	2,141
		Retained earnings	13,611
		Total stockholders’ equity (deficit)	$17,278
Total Assets	$57,048	Total Liabilities and Stockholders’ Equity	$57,048

Calculate the financial ratios for the International Carrier Services company and compare them to the financial ratios provided for the trucking industry to which the evaluated company belongs.

Ratio	International Carrier Services	Industry Average
Current ratio	….	2.05
Quick ratio	….	0.78
Gross margin	….	23.9%
Profit margin	….	12.3%
Debt ratio	….	0.23
Long-term debt to equity	….	0.98
Time interest-earned ratio	….	5.62
ROA	….	5.3%
ROE	….	18.8%

Based on the results of the previous year and your evaluation, propose the adjustments or strategies that you understand the company must carry out in order to be in a better financial position.
Would you invest in stocks or bonds of this company? Explain.

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