WILDHORSE COMPANY Balance Sheets December 31 2027 2026 Current assets Cash and cash equivalents $330 $360 Accounts receivable (net) 600 530 Inventory 610 540 Prepaid expenses 120 160 Total current assets 1,660 1,590 Investments 140 140 Property, plant, and equipment (net) 420 380 Intangibles and other assets 530 510 Total assets $2,750 $2,620 Current liabilities $1,030 $920 Long-term liabilities 560 530 Stockholders' equity-common 1,160 1,170 Total liabilities and stockholders' equity $2,750 $2,620 WILDHORSE COMPANY Income Statements For the Years Ended December 31 2027 2026 $3,950 $3,610 Net sales Expenses Cost of goods sold 1,085 1,020 Selling and administrative expenses 2,400 2,330 Interest expense 25 20 Total expenses 3,510 3,370 Income before income taxes 440 240 Income tax expense 132 72 Net income $308 $ 168 Compute the following ratios for 2027 and 2026. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 12.6%.) (a) Current ratio, (b) Inventory turnover. (Inventory on 12/31/25 was $370.) (c) Profit margin. (d) Return on assets. (Assets on 12/31/25 were $2,440.) (e) Return on common stockholders' equity. (Stockholders' equity-common on 12/31/25 was $980.) (f) Debt to assets ratio. (g) Times interest earned.
WILDHORSE COMPANY Balance Sheets December 31 2027 2026 Current assets Cash and cash equivalents $330 $360 Accounts receivable (net) 600 530 Inventory 610 540 Prepaid expenses 120 160 Total current assets 1,660 1,590 Investments 140 140 Property, plant, and equipment (net) 420 380 Intangibles and other assets 530 510 Total assets $2,750 $2,620 Current liabilities $1,030 $920 Long-term liabilities 560 530 Stockholders' equity-common 1,160 1,170 Total liabilities and stockholders' equity $2,750 $2,620 WILDHORSE COMPANY Income Statements For the Years Ended December 31 2027 2026 $3,950 $3,610 Net sales Expenses Cost of goods sold 1,085 1,020 Selling and administrative expenses 2,400 2,330 Interest expense 25 20 Total expenses 3,510 3,370 Income before income taxes 440 240 Income tax expense 132 72 Net income $308 $ 168 Compute the following ratios for 2027 and 2026. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 12.6%.) (a) Current ratio, (b) Inventory turnover. (Inventory on 12/31/25 was $370.) (c) Profit margin. (d) Return on assets. (Assets on 12/31/25 were $2,440.) (e) Return on common stockholders' equity. (Stockholders' equity-common on 12/31/25 was $980.) (f) Debt to assets ratio. (g) Times interest earned.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:WILDHORSE COMPANY
Balance Sheets
December 31
2027
2026
Current assets
Cash and cash equivalents
$330
$360
Accounts receivable (net)
600
530
Inventory
610
540
Prepaid expenses
120
160
Total current assets
1,660
1,590
Investments
140
140
Property, plant, and equipment (net)
420
380
Intangibles and other assets
530
510
Total assets
$2,750
$2,620
Current liabilities
$1,030
$920
Long-term liabilities
560
530
Stockholders' equity-common
1,160
1,170
Total liabilities and stockholders' equity
$2,750
$2,620
WILDHORSE COMPANY
Income Statements
For the Years Ended December 31
2027
2026
$3,950
$3,610
Net sales
Expenses
Cost of goods sold
1,085
1,020
Selling and administrative expenses
2,400
2,330
Interest expense
25
20
Total expenses
3,510
3,370
Income before income taxes
440
240
Income tax expense
132
72
Net income
$308
$ 168
Compute the following ratios for 2027 and 2026. (Round current ratio and inventory turnover to 2 decimal
places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 12.6%.)
(a)
Current ratio,
(b)
Inventory turnover. (Inventory on 12/31/25 was $370.)
(c)
Profit margin.
(d)
Return on assets. (Assets on 12/31/25 were $2,440.)
(e)
Return on common stockholders' equity. (Stockholders' equity-common on 12/31/25 was $980.)
(f)
Debt to assets ratio.
(g)
Times interest earned.
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