Solution-Compute the ratios, Compute the ratios. to which

Compute the ratios

Assignment Help Taxation

Reference no: EM13327287

Problem

Given the financial statements for Jones Corporation and Smith Corporation:

JONES CORPORATION
Current Assets			Liabilities
Cash	$	29,700	Accounts payable	$	166,000
Accounts receivable		88,500	Bonds payable (long term)		82,100
Inventory		51,300
Long-Term Assets			Stockholders' Equity
Fixed assets	$	542,000	Common stock	$	150,000
Less: Accumulated depreciation		(154,700)	Paid-in capital		70,000
Net fixed assets*		387,300	Retained earnings		88,700

Total assets	$	556,800	Total liabilities and equity	$	556,800


Sales (on credit)	$	1,914,000
Cost of goods sold		771,000

Gross profit		1,143,000
Selling and administrative expense^†		325,000
Less: Depreciation expense		59,600

Operating profit		758,400
Interest expense		9,200

Earnings before taxes		749,200
Tax expense		102,300

Net income	$	646,900

*Use net fixed assets in computing fixed asset turnover.
†Includes $7,900 in lease payments.

SMITH CORPORATION
Current Assets			Liabilities
Cash	$	39,800	Accounts payable	$	76,500
Marketable securities		12,200	Bonds payable (long term)		225,000
Accounts receivable		74,600
Inventory		77,700
Long-Term Assets			Stockholders' Equity
Fixed assets	$	509,000	Common stock	$	75,000
Less: Accumulated depreciation		(252,600)	Paid-in capital		30,000
Net fixed assets*		256,400	Retained earnings		54,200

Total assets	$	460,700	Total liabilities and equity	$	460,700

*Use net fixed assets in computing fixed asset turnover.

SMITH CORPORATION
Sales (on credit)	$	1,150,000
Cost of goods sold		687,000

Gross profit		463,000
Selling and administrative expense^†		281,000
Less: Depreciation expense		59,200

Operating profit		122,800
Interest expense		27,100

Earnings before taxes		95,700
Tax expense		54,200

Net income	$	41,500

Includes $7,900 in lease payments.

(a-1) Compute the following ratios.

(a-2) To which one would you, as credit manager for a supplier, approve the extension of (short-term) trade credit?

(b) In which one would you buy stocks?

Reference no: EM13327287

Questions Cloud

The culture that produces the barbie doll : Compare the culture that produced the Venus de Willendorf with the culture that produces the Barbie doll.

Develop requirements that provides a high-level description : Using the case study provided, students will prepare and deliver an analysis which is divided into five parts, or stages. Each stage is to be completed and submitted via the Assignment Folder according to the Course Schedule.

Science fiction feature films : Metropolis (1927), Invasion of the Body Snatchers (1956), Invasion of the Body Snatchers (1978), The Day the Earth Stood Still (1951), The Day the Earth Stood Still (2008), Silent Running,

Determine how should firm finance the acquisition : Analysts project that the merger will result in incremental free flows and interest tax savings with a present value of $72.52 million, and they have determined that the appropriate discount rate for valuing Eastern Co. as a sta..

Compute the ratios : Compute the ratios. to which one would you, as credit manager for a supplier, approve the extension of (short-term) trade credit?

How much money do need to buy 300 shares of time : At your brokerage firm, it costs $9.50 per stock trade. How much money do you need to buy 300 shares of time Warner, Inc. (TWX) which trades at $22.62

Acute kidney failure versus chronic kidney disease : 1-2 complete paragraphs, compare the ICD-10-CM codes for acute kidney failure (category N17) versus chronic kidney disease (category N18), and review the differences between these conditions.

What was the return f the stock market for march 14-2013 : THe index closed at 14,539.14, which was up from the previous day's close of 14,455.28. What was the return (in percent to four decimal places) of the stock market for March 14, 2013

Perform a needs assessment/gap analysis : Select a health care organization (local or national, large or small, public or private) and perform a needs assessment/gap analysis. You may utilize your own organization if you are employed in a health care related company. You may approach t..

User Account

All Pages

Compute the ratios

Reference no: EM13327287

Reference no: EM13327287

Questions Cloud

Reviews

Write a Review

Taxation Questions & Answers

Taxable income

Prepare a tax research memo

Income by ordinary concepts

Identify the tax issues

Calculate carolines taxable income

Taxation – law and practice

Payment to the taxpayer

Prepare regular corporation tax return

Taxation law

A tax on cigarettes is a good way of raising tax revenue

Prepare the required journal entry

Calculate barbs taxable income

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT