There was a bit of concern about one of Big Rock's newer entities - Big Rock Paving Company. Management wants you to review the two financial statements below and give your analysis of the company's performance. Big Rock Paving Company Current Assets: Cash Assets Accounts Receivable Inventory Total Current Assets Fixed Assets: Property, Plant & Equipment Less: Accumulated Depreciation Net Fixed Assets Total Assets Current Liabilities: Accounts Payable 200,000 300,000 Notes Payable 800,000 1,300,000 Less: Taxes Net Income 2,200,000 600,000 Capital Surplus 1,600,000 Retained Earnings 2,900,000 Total Current Liabilities Owners' Equity: Common Stock ($1 Par) Dividends Addition to Retained Earnings Liabilities Big Rock Paving Company Income Statement for Year Ending December 31, 2021 Sales Less: Cost of Goods Sold Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense Taxable Income Total Owners' Equity Total Liabilities and Owners' Equity 3,400,000 2,700,000 700,000 682,000 (682,000) 120,000 (802,000) (280,000) (522,000) (522,000) 0 Required: Evaluate the performance of Big Rock Paving Company using the below ratios. Define each ratio, perform the calculation, and provide an explanation of the result 700,000 600,000 1,300,000 600,000 100,000 100,000 800,000 2,900,000
There was a bit of concern about one of Big Rock's newer entities - Big Rock Paving Company. Management wants you to review the two financial statements below and give your analysis of the company's performance. Big Rock Paving Company Current Assets: Cash Assets Accounts Receivable Inventory Total Current Assets Fixed Assets: Property, Plant & Equipment Less: Accumulated Depreciation Net Fixed Assets Total Assets Current Liabilities: Accounts Payable 200,000 300,000 Notes Payable 800,000 1,300,000 Less: Taxes Net Income 2,200,000 600,000 Capital Surplus 1,600,000 Retained Earnings 2,900,000 Total Current Liabilities Owners' Equity: Common Stock ($1 Par) Dividends Addition to Retained Earnings Liabilities Big Rock Paving Company Income Statement for Year Ending December 31, 2021 Sales Less: Cost of Goods Sold Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense Taxable Income Total Owners' Equity Total Liabilities and Owners' Equity 3,400,000 2,700,000 700,000 682,000 (682,000) 120,000 (802,000) (280,000) (522,000) (522,000) 0 Required: Evaluate the performance of Big Rock Paving Company using the below ratios. Define each ratio, perform the calculation, and provide an explanation of the result 700,000 600,000 1,300,000 600,000 100,000 100,000 800,000 2,900,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Question
a. Return on equity
b. Total assets turnover
c. Return on assets
d. Current ratio
e. Receivables turnover
Transcribed Image Text:There was a bit of concern about one of Big Rock's newer entities - Big Rock Paving
Company. Management wants you to review the two financial statements below and give
your analysis of the company's performance.
Big Rock Paving Company
Current Assets:
Cash
Assets
Accounts Receivable
Inventory
Total Current Assets
Fixed Assets:
Property, Plant & Equipment
Less: Accumulated Depreciation
Net Fixed Assets
Total Assets
200,000
300,000
800,000
1,300,000
Current Liabilities:
Accounts Payable
Notes Payable
Less: Taxes
Net Income
2,200,000
600,000 Capital Surplus
1,600,000 Retained Earnings
2,900,000
Total Current Liabilities
Owners' Equity:
Common Stock ($1 Par)
Big Rock Paving Company
Income Statement for Year Ending December 31, 2021
Sales
Less: Cost of Goods Sold
Less: Administrative Expenses
Less Depreciation
Dividends
Addition to Retained Earnings
Liabilities
Total Owners' Equity
Total Liabilities and Owners'
Equity
Earnings Before Interest and Taxes
Less: Interest Expense
Taxable Income
3,400,000
2,700,000
700,000
682,000
(682,000)
120,000
(802,000)
(280,000)
(522,000)
0
(522,000)
Required: Evaluate the performance of Big Rock Paving Company using the below
ratios. Define each ratio, perform the calculation, and provide an explanation of the
result.
700,000
600,000
1,300,000
600,000
100,000
100,000
800,000
2,900,000
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