Astrologer help

 

1.

    

  Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:

  EdisonStaggThorntonCash$

4,000

$2,500$1,000 Short-term investments3,0002,5002,000 Accounts receivable2,0002,5003,000 Inventory1,0002,5004,000 Prepaid expenses800800800 Accounts payable200200200 Notes payable: short-term

3,100

3,1003,100 Accrued payables300300300 Long-term liabilities3,8003,8003,800          

1. Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?

 

2.      Computation and evaluation of activity ratios. The following data relate to Alaska Products, Inc:

  20X520X4Net credit sales$832,000$760,000 Cost of goods sold440,0003

50,000

 Cash, Dec. 311

25,000

110,000 Average Accounts receivable180,000140,000 Average Inventory70,00050,000 Accounts payable, Dec. 31115,000108,000       

1. Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.

 

3.      Profitability ratios, trading on the equity. Digital Relay has both preferred and common stock outstanding. The com­pany reported the following information for 20X7:

 Net sales$1,500,000Interest expense$120,000Income tax expense$80,000Preferred dividends$25,000Net income$130,000Average assets$1,100,000Average common stockholders’ equity$

400

,000  

1. Compute the profit margin ratio, the return on equity and the return on assets, rounding calculations to two decimal places.
2. Does the firm have positive or negative financial leverage? Briefly ex­plain.

  

4.     
Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the

20X1

and

20X2

financial statements follow.

 

20X2 20X1

(net)

25,00050,000

    

Current Assets	$7	6,000	$80,000
Property, Plant, and Equipment
99,000	90,000
Intangibles
Current Liabilities	40,800	48,000
Long-Term Liabilities	143,000	160,000
Stockholders’ Equity	16,200	12,000
Net Sales	500,000	500,000
Cost of Goods Sold	332,500	350,000
Operating Expenses	93,500	85,000

 

Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.

 

5.     
Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.

 

20X2 20X1

Current

500,000

    

Assets
$ 76,000	$ 80,000
Property, Plant, and Equipment (net)	99,000	90,000
Intangibles	25,000	50,000
	Current Liabilities
40,800	48,000
	Long-Term Liabilities
14	3,000	160,000
	Stockholders’ Equity
16,200	1	2,000
Net Sales		500,000
Cost of Goods Sold	332,500	350,000
Operating Expenses	93,500	85,000

 

Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.

  

6.    Ratio computation. The financial statements of the Lone Pine Company follow.

 

20X2 20X1Assets

3,000

2,000

Property, Plant, and Equipment

$ 600

Current Liabilities

$1,700

Long-Term Liabilities

Stockholders’ Equity

$ 200

900

$1,600

$8,600 $6,800

    

LONE PINE COMPANY Comparative Balance Sheets December 31, 20X2 and 20X1 ($000 Omitted)
	Current Assets
Cash and Short-Term Investments	$ 400		$ 600
Accounts Receivable (net)	2,400
Inventories	2,200
Total Current Assets	$5,400	$5,200
Land		$1,700
Buildings and Equipment (net)	1,500	1,000
Total Property, Plant, and Equipment	$3,200		$1,600
Total Assets		$8,600		$6,800
Liabilities and Stockholders’ Equity
Accounts Payable	$1,800
Notes Payable	1,100	1,		900
Total Current Liabilities	$2, 900	$3,600
Bonds Payable	4,100	2,100
Total Liabilities	$7,000	$5,700
Common Stock		$ 200
Retained Earnings	1,400
Total Stockholders’ Equity	$1,100
Total Liabilities and Stockholders’ Equity

 

6,000

4,000

400

900

3,100

    

LONE PINE COMPANY Statement of Income and Retained Earnings For the Year Ending December 31,20X2 ($000 Omitted)
Net Sales*	$36,000
Less: Cost of Goods Sold	$20,000
Selling Expense
Administrative Expense
Interest Expense
Income Tax Expense	2,000	32,400
Net Income	$ 3,600
Retained Earnings, Jan. 1
$ 4,500
Cash Dividends Declared and Paid
Retained Earnings, Dec. 31	$ 1,400
*All sales are on account.

 

Instructions

Compute the following items for Lone Pine Company for 20X2, rounding all calcu­lations to two decimal places when necessary:

a. Quick ratio

b. Current ratio

c. Inventory-turnover ratio

d. Accounts-receivable-turnover ratio

e. Return-on-assets ratio

f. Net-profit-margin ratio

g. Return-on-common-stockholders’ equity

h. Debt-to-total assets

i. Number of times that interest is earned