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 Assets Liabilities Current Assets: Current Liabilities: Cash Accounts Receivable 500,000 Accounts Payable 300,000 Notes Payable 800,000 700,000 500,000 Inventory Total Current Assets 1,300,000 Total Current Liabilities 1,200,000 Fixed Assets: Owners' Equity: Property, Plant & Equipment Less: Accumulated Depreciation 2,200,000 Common Stock ($1 Par) 600,000 Capital Surplus 1,600,000 Retained Earnings 2,900,000 Total Owners' Equity 600,000 100,000 Net Fixed Assets 100,000 Total Assets 800,000 Total Liabilities and Owners' 2,900,000 Equity Big Rock Paving Company Income Statement for Year Ending December 31, 2021 Sales 3,400,000 Less: Cost of Goods Sold Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense 2,700,000 700,000 682,000 (682,000) 120,000 (802,000) (280,000), (522,000) Taxable Income Less: Taxes Net Income Dividends Addition to Retained Earnings (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. a. Return on equity b. Total assets turnover c. Return on assets d. Current ratio e. Receivables turnover
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 Assets Liabilities Current Assets: Current Liabilities: Cash Accounts Receivable 500,000 Accounts Payable 300,000 Notes Payable 800,000 700,000 500,000 Inventory Total Current Assets 1,300,000 Total Current Liabilities 1,200,000 Fixed Assets: Owners' Equity: Property, Plant & Equipment Less: Accumulated Depreciation 2,200,000 Common Stock ($1 Par) 600,000 Capital Surplus 1,600,000 Retained Earnings 2,900,000 Total Owners' Equity 600,000 100,000 Net Fixed Assets 100,000 Total Assets 800,000 Total Liabilities and Owners' 2,900,000 Equity Big Rock Paving Company Income Statement for Year Ending December 31, 2021 Sales 3,400,000 Less: Cost of Goods Sold Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense 2,700,000 700,000 682,000 (682,000) 120,000 (802,000) (280,000), (522,000) Taxable Income Less: Taxes Net Income Dividends Addition to Retained Earnings (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. a. Return on equity b. Total assets turnover c. Return on assets d. Current ratio e. Receivables turnover
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
Problem 1PS
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Answer d and e
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
Assets
Liabilities
Current Assets:
Current Liabilities:
500,000 Accounts Payable
300,000 Notes Payable
Cash
700,000
500,000
Accounts Receivable
Inventory
800,000
Total Current Assets
1,300,000 Total Current Liabilities
1,200,000
Fixed Assets:
Owners' Equity:
Property, Plant & Equipment
Less: Accumulated Depreciation
Net Fixed Assets
2,200,000 Common Stock ($1 Par)
600,000 Capital Surplus
1,600,000 Retained Earnings
2,900,000 Total Owners' Equity
600,000
100,000
100,000
Total Assets
800,000
Total Liabilities and Owners'
2,900,000
Equity
Big Rock Paving Company
Income Statement for Year Ending December 31, 2021
Sales
3,400,000
Less: Cost of Goods Sold
2,700,000
700,000
Less: Administrative Expenses
Less Depreciation
Earnings Before Interest and Taxes
Less: Interest Expense
682,000
(682,000)
120,000
(802,000)
(280,000)
(522,000)
Taxable Income
Less: Taxes
Net Income
Dividends
Addition to Retained Earnings
(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.
a. Return on equity
b. Total assets turnover
c. Return on assets
d. Current ratio
e. Receivables turnover
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