Find the current ratio and quick ratio

Assignment Help Financial Management

Reference no: EM131682336 , Length: 9

Prob.1: Income statement

Net working capital

Sales	$ 800,000
Cost of goods sold	$ 300,000
Gross profit	$ 500,000
Selling & administrative expenses	$ 40,000
Depreciation expenses *	$ 30,000
EBIT (Operating Profit)	$ 430,000
Interest expenses	$ 20,000
EBT	$ 410,000
Taxes	$ 110,000
EAT	$ 300,000
Preferred stock dividends	$ 80,000
Net income to common stockholders	$ 220,000
Common stock dividends	$ 100,000
Retained Earnings	$ 120,000
Share outstanding	100,000
Earning per share (EPS)	$ 2.20
Dividend Payout Ratio	45.45%
Retention Ratio	54.55%

Find the current ratio and quick ratio?

PROB.2

Find net income first and find ROE.

a. Earnings After Tax.
Sales	$ 700,000
Cost of goods sold (70% of Sales)	$ 490,000
Gross profit	$ 210,000
Selling & adm. Expenses (12% of Sales)	$ 84,000
Depreciation expenses *	$ 10,000
EBIT (Operating Profit)	$ 116,000
Interest expenses	$ 8,000
EBT	$ 108,000
Taxes (30%)	$ 32,400
EAT	$ 75,600

Sales	$ 750,000
Cost of goods sold (66% of Sales)	$ 495,000
Gross profit	$ 255,000
Selling & adm. Expenses (14% of Sales)	$ 105,000
Depreciation expenses *	$ 10,000
EBIT (Operating Profit)	$ 140,000
Interest expenses	$ 15,000
EBT	$ 125,000
Taxes (30%)	$ 37,500
EAT	$ 87,500

Mr. Carr's idea will increase profitability.

PROB.3

Balance Sheet

Current Assets:
Cash	$ 10,000
Marketable Securities	$ 20,000
Accounts Receivable	$ 48,000
Less: Allowance for bad debts	$ (6,000)
Inventory	$ 66,000
Total Current Assets	$ 138,000
Other Assets: Investment	$ 20,000
Fixed Assests:
Plant and equipment	$ 680,000
Less: Accumulated depreciation**	$ 300,000
Net plant and equipment	$ 380,000
Total assets	$ 538,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 35,000
Notes payable	$ 33,000
Total Current Liabilities	$ 68,000
Long-term Liabilities
Bonds payable	$ 136,000
Total liabilities	$ 204,000
Stockholders' equity:
Preferred stock ($50 par @ 1,000 shares)	$ 50,000
Common stock ($1 par @100,000 shares)	$ 100,000
Capital paid in excess of par	$ 88,000
Retained earnings	$ 96,000
Stockholders' equity	$ 334,000
Total liabilities and stockholders' equity	$ 538,000

PROB.4

a. Income statement: Dec. 31 2011
Sales	$220,000
Cost of goods sold	$132,000
Gross profit	$88,000
Selling & administrative expenses	$22,000
Depreciation expenses *	$20,000
EBIT	$46,000
Interest expenses	$8,000
EBT	$38,000
Taxes (20%)	$7,600
EAT	$30,400
Preferred stock dividends	$2,000
Earnings available to commonstockholders	$28,400
Dividends paid to commonstockholders	$8,400
Balance retained in corporation	$20,000
Shares outstanding	10,000
EPS	$2.84

b. Statement of retained earnings
Retained earnings, balance, Dec. 31, 2010	$ 80,000
Add: Earnings available to common stockholders in 2010	$ 28,400
Deduct: Cash dividends declared in 2010	$ 8,400
Retained earnings, balance, Dec. 31, 2011	$ 100,000

c. Balance Sheet	Year 2010	Year 2011
Current Assets:
Cash	$ 10,000	$ 10,000
Accounts Receivable	$ 15,000	$ 16,500
Inventory	$ 25,000	$ 27,500
Prepaid expenses	$ 12,000	$ 12,000
Plant and equipment	$ 250,000	$ 285,000
Less: Accumulated depreciation**	$ 50,000	$ 70,000
Net plant and assets	$ 200,000	$ 215,000
Total assets	$ 262,000	$ 281,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 12,000	$ 15,000
Notes payable	$ 20,000	$ 26,000
Bonds payable	$ 50,000	$ 40,000
Stockholders' equity:
Common stock	$ 75,000	$ 75,000
Paid-in capital	$ 25,000	$ 25,000
Retained earnings	$ 80,000	$ 100,000
Total liabilities and stockholders' equity	$ 262,000	$ 281,000

Find

Statement of Cash Flows

Common-Size Income statement: Dec. 31 2011

Common-Size Balance Sheet

Reference no: EM131682336

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