There was a bit of concern about one of RBL's newer entities - RBL Paving Company. Management wants you to review the two financial statements below and give your analysis of the company's performance. RBL 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: 200,000 Accounts Payable 300,000 Notes Payable 800,000 1,300,000 Total Current Liabilities Owners' Equity: 2,200,000 Common Stock ($1 Par) Liabilities 600,000 Capital Surplus 1,600,000 Retained Earnings 2,900,000 Total Owners' Equity Sales Less: Cost of Goods Sold RBL Paving Company Income Statement for Year Ending December 31, 2021 Total Liabilities and Owners' Equity Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense Taxable Income Less: Taxes Net Income Dividends Addition to Retained Earnings 3,400,000 2,700,000 700,000 682,000 (682,000) 120,000 (802,000) (280,000) (522,000) 0 (522,000) 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 RBL's newer entities - RBL Paving Company. Management wants you to review the two financial statements below and give your analysis of the company's performance. RBL 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: 200,000 Accounts Payable 300,000 Notes Payable 800,000 1,300,000 Total Current Liabilities Owners' Equity: 2,200,000 Common Stock ($1 Par) Liabilities 600,000 Capital Surplus 1,600,000 Retained Earnings 2,900,000 Total Owners' Equity Sales Less: Cost of Goods Sold RBL Paving Company Income Statement for Year Ending December 31, 2021 Total Liabilities and Owners' Equity Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense Taxable Income Less: Taxes Net Income Dividends Addition to Retained Earnings 3,400,000 2,700,000 700,000 682,000 (682,000) 120,000 (802,000) (280,000) (522,000) 0 (522,000) 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
Problem 1PS
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Question
Required: Evaluate the performance of RBL 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
Transcribed Image Text:There was a bit of concern about one of RBL's newer entities - RBL Paving Company.
Management wants you to review the two financial statements below and give your
analysis of the company's performance.
RBL 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 Total Current Liabilities
2,200,000
600,000 Capital Surplus
1,600,000 Retained Earnings
2,900,000
Liabilities
Owners' Equity:
Common Stock ($1 Par)
Dividends
Addition to Retained Earnings
Total Owners' Equity
Total Liabilities and Owners'
Equity
RBL 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
Less: Taxes
Net Income
3,400,000
2,700,000
700,000
682,000
(682,000)
120,000
(802,000)
(280.000)
(522,000)
0
(522,000)
700,000
600,000
1,300,000
600,000
100,000
100,000
800,000
2,900,000
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