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Did the short-term liquidity improve or deteriorate

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Reference no: EM132626266

Question (1) Prepare the income statements and balance sheets for years 2017 and 2018 for Smith Company using the following information. The balance sheet numbers are at the end of year figures.

Item 2017 2018
Accounts Payable 150 180
Accounts Receivable 150 180
Accumulated Depreciation 270 300
Cash & Cash Equivalents 10 12
Common Stock 50 50
Cost of Goods Sold 550 650
Depreciatio 25 30
Interest Expense 20.2 21.7
Inventory 200 180
Long-term Debt 150 150
Gross Plant & Equipment 520 600
Retained Earnings 208.5 225
Sales 1,000.00 1,200.00
SG&A Expenses 300 370
Notes Payable 51.5 67
Tax Rate 40% 40%

Question (2) Answer the following questions:

(a) How much did Smith Company spend in acquiring fixed assets in 2018?

(b) How much dividend did Smith Company pay out during 2018?

(c) Using the end of year numbers, did the short-term liquidity improve or deteriorate from 2017 to 2018? Answer this question using at least two short-term liquidity financial ratios.

(d) Using the end of year numbers, did the asset management efficiency improve or deteriorate from 2017 to 2018? Answer this question using at least two asset management financial ratios.

Reference no: EM132626266

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