Use the common-size financial statements found here: ommon-Size Balance Sheet 2016 Cash and marketable securities $ 480 1.5 % Accounts receivable 6,030 18.2 Inventory 9,540 28.8 Total current assets $ 16,050 48.5 % Net property, plant, and equipment 17,020 51.5 Total assets $ 33,070 100.0 % Accounts payable $ 7,150 21.6 % Short-term notes 6,850 20.7 Total current liabilities $ 14,000 42.3 % Long-term liabilities 7,010 21.2 Total liabilities $ 21,010 63.5 % Total common shareholders’ equity 12,060 36.5 Total liabilities and shareholders’ equity $ 33,070 100.0 % Common-Size Income Statement 2016 Revenues $ 30,000 100.0 % Cost of goods sold (20,050) 66.8 Gross profit $ 9,950 33.2 % Operating expenses (7,960) 26.5 Net operating income $ 1,990 6.6 % Interest expense (940) 3.1 Earnings before taxes $ 1,050 3.5 % Income taxes (382) 1.3 Net income $ 668 2.2 % Specifically, write up a brief narrative that responds to the following questions: a. How much cash does Patterson have on hand relative to its total assets? b. What proportion of Patterson's assets has the firm financed using short-term debt? Long-term debt? c. What percent of Patterson's revenues does the firm have left over after paying all of its expenses (including taxes)? d. Describe the relative importance of Patterson's major expense categories, including cost of goods sold, operating expenses, and interest expenses.

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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Use the common-size financial statements found here:

ommon-Size Balance Sheet 2016
Cash and marketable securities $ 480 1.5 %
Accounts receivable 6,030 18.2
Inventory 9,540 28.8
Total current assets $ 16,050 48.5 %
Net property, plant, and equipment 17,020 51.5
Total assets $
33,070 100.0 %
Accounts payable $ 7,150 21.6 %
Short-term notes 6,850 20.7
Total current liabilities $ 14,000 42.3 %
Long-term liabilities 7,010 21.2
Total liabilities $ 21,010 63.5 %
Total common shareholders’ equity 12,060 36.5
Total liabilities and shareholders’ equity $
33,070 100.0 %
Common-Size Income Statement 2016
Revenues $ 30,000 100.0 %
Cost of goods sold (20,050) 66.8
Gross profit $ 9,950 33.2 %
Operating expenses (7,960) 26.5
Net operating income $ 1,990 6.6 %
Interest expense (940) 3.1
Earnings before taxes $ 1,050 3.5 %
Income taxes (382) 1.3
Net income $
668 2.2 %

Specifically, write up a brief narrative that responds to the following questions:

a. How much cash does Patterson have on hand relative to its total assets?

b. What proportion of Patterson's assets has the firm financed using short-term debt? Long-term debt?

c. What percent of Patterson's revenues does the firm have left over after paying all of its expenses (including taxes)?

d. Describe the relative importance of Patterson's major expense categories, including cost of goods sold, operating expenses, and interest expenses.

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