How to standardize financial statements for comparison

Assignment Help Financial Management

Reference no: EM133071034

Question 1: Birtle Corporation reports the following statement of financial position information for 2017 and 2018.

BIRTLE CORPORATION

	Assets	2017 and 2018 Statement of Financial Position Liabilities and Owners' Equity
	2017	2018		2017	2018
Current assets			Current liabilities
Cash	$ 9,279	$ 11,173	Accounts payable	$ 41,060	$ 43,805
Accounts receivable	23,683	25,760	Notes payable	16,157	16,843
Inventory	42,636	46,915
Total	S 75,598	$ 83,848	Total	$ 57,217	$ 60,648
			Long-term debt	$ 40,000	$ 35,000
Fixed assets			Owners' equity
			Common stock and paid-in surplus	$ 50,000	$ 50,000
			Retained earnings	200,428	236,167
Net plant and equipment	$272,047	$297,967	Total	$250,428	$286,167
Total assets	$347,645	$381,815	Total liabilities and owners' equity	$347,645	$381,815

Prepare the 2017 and 2018 common-size statement of financial position for Birtle

	2017			2018
Assets
Current assets
Cash	$ 9,279		%	$ 11,173
Accounts receivable	23,683		%	25,760
Inventory	42,636		%	46,915
Total	$ 75,598		%	$ 83,848
Fixed assets
Net plant and equipment	$272,047	I	I%	$297,967
Total assets	$347,645	I	I %	$381,815	I	I
Liabilities and Owners' Equity
Current liabilities
Accounts payable	$ 41,060		%	$ 43,805		%
Notes payable	16,157		%	16,843		%
Total	$ 57,217		%	$ 60,648		%
Long-term debt	$ 40,000		%	$ 35,000		%
Owners' equity
Common stock and paid-in surplus	$ 50,000		%	$ 50,000		%
Accumulated retained earnings	200,428		%	236,167		%
Total	$250,428		%	$286,167		%
Total liabilities and owners' equity	$347,645		%	$381,815		%

Learning Objective 1: How to standardize financial statements for comparison purposes.

Question 2:

Bidle Corporation reports the following statement of financial position information for 2017 and 2018.

BIRTLE CORPORATION
2017 and 2018 Statement of Financial Position

	Assets 2017	2018	Liabilities and Owners' Equity 2017		2018
Current assets			Current liabilities
Cash	$ 9,279	$ 11,173	Accounts payable	$ 41,060	$ 43,805
Accounts receivable	23,683	25,760	Notes payable	16,157	16,843
Inventory	42,636	46,915
Total	$ 75,598	$ 83,848	Total	$ 57,217	$ 60,648
			Long-term debt	S 40,000	$ 35,000
Fixed assets			Owners' equity
Net plant and equipment	$272,047	$297,967	Common stock and paid-in surplus	$ 50,000	$ 50,000
			Retained earnings	200,428	236,167
			Total	$250,428	$286,167
Total assets	$347,645	$381,815	Total liabilities and owners' equity	$347,645	$381,815

Based on the statement of financial position given for Birtle:

a. Calculate the current ratio for each year.

2017 2018

b. Calculate the quick ratio for each year.

2017 2018

c. Calculate the cash ratio for each year.

2017 2018

d. Calculate the NWC to total assets ratio for each year.

e. Calculate the debt-equity ratio and equity multiplier for each year.

Debt-equity ratio
Equity multiplier

f. Calculate the total debt ratio and long-term debt ratio for each year. (Round the final answers to 3 decimal places.)
2017 2018

Total debt ratio

Long-term debt ratio

Learning Objective 2: How to compute and, more importantly, interpret some common ratios.

Question 3:

Some recent financial statements for Earl Grey Golf Corp. follow.

Assets	2017 2017	EARL GREY GOLF CORP. and 2018 Statement of Financial Position Liabilities and Owners' 2018		Equity 2017	2018
Current assets			Current liabilities
Cash	$ 24,046	$ 24,255	Accounts payable	$ 23,184	$ 27,420
Accounts receivable	12,448	15,235	Notes payable	12,000	10,800
Inventory	25,392	27,155	Other	11,571	15,553
Total	$ 61,886	$ 66,645	Total	$ 46,755	$ 53,773
			Long-term debt	$ 80,000	$ 95,000
Fixed assets			Owners' equity
Net plant and equipment	$324,695	$365,734	Common stock and paid-in surplus	$ 40,000	$ 40,000
			Retained earnings	219,826	243,606
			Total	$259,826	$283,606
Total assets	$386,581	$432,379	Total liabilities and owners' equity	$386,581	$432,379

EARL GREY GOLF CORP.
2018 Statement of Comprehensive Income

Sales	$366,996
Cost of goods sold	253,122
Depreciation	32,220
Earnings before interest and tax	$ 81,654
Interest paid	14,300
Taxable income	$ 67,354
Taxes (35%)	23,574
Net income	$ 43,780

Dividends $20,000

Additions to retained earnings 23,780

The company's profit margin is ____ percent.

Total asset turnover is ____ times.

Equity multiplier is ____ .

Using the Du Pont Identity, the company's ROE is ____ percent.

Learning Objective 3: The determinants of a firm's profitability.

Reference no: EM133071034

Questions Cloud

Compute the annual finance charge or annual finance cost : Compute the annual finance charge or annual finance cost of paying on the 5th day and taking the trade discount on an invoice of P50,000.00

What is the net present value of accepting the special order : X Company has an opportunity to accept a special order that will result in immediate profit of $67,000. What is net present value of accepting special order

On what date does this note mature : Sylvestor Systems borrows $187,000 cash on May 15 by signing a 180-day, 6%, $187,000 note. On what date does this note mature

How much cash must be provided from operations : Beta Co. plans to raise $10 000 in new equity this year and wants to pay a dividend to shareholders of $30 000 in total. How much cash must be provided

How to standardize financial statements for comparison : How to standardize financial statements for comparison purposes and How to compute and, more importantly, interpret some common ratios

What should be the impairment loss : The current book value of this machine is $2,100. The interest rate is 10%. What should be the impairment loss

What is the probability that the mean time for the sample : Suppose 130 returns from this year are selected and analyzed regarding the preparation time. What is the probability that the mean time for sample

Is rose and sonny acting in an ethical manner : JT is a staff accountant for Rose and Sonny, a local CPA firm. Is Rose and Sonny acting in an ethical manner by eliminating the bonus

Determine the inflation premium on the treasury bill : If the expected real rate of interest is 2.7 percent, determine the inflation premium on the Treasury bill

User Account

All Pages