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Jain can you please answer the questions that have the boxes out of the boxes as im having problems seeing the entire anwers. thank you!
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Prepare a comparative balance sheet of Gilmour Company showing the dollar change and the percent change for each item.
(Round percentages to 2 decimal places, e.g. 2.25
%
. If $ or % change are in decrease, enter amounts or percentages using either a negative sign preceding the number e.g. -45, -2.25% or parentheses e.g. (45), (2.25)%.)
GILMOUR COMPANY
Comparative Balance Sheet
December 31, 2
0
13 and 2012
December 31
Increase or (Decrease)
Assets
2013
2012
$ Change
% Change
Cash
$ 180,000
$ 275,000
$
$-95,000
-34.55%
Accounts receivable (net)
219,500
155,300
64,200
41.34%
Short-term investments
269,300
149,600
119,700
80.01%
Inventories
1,059,600
979,300
80,300
8.20%
Prepaid expenses
24,750
24,750
0.00%
Fixed assets
2,585,200
1,949,400
635,800
32.62%
Accumulated depreciation
( 1,000,500
)
( 750,
100
)
-250,400
33.38%
Total
$ 3,337,850
$ 2,783,250
$
%
554,600
19.93%
Liabilities and Stockholders’ Equity
Accounts payable
$ 50,020
$ 74,100
$
%
-24,080
-32.50%
Accrued expenses
170,400
199,400
-29,000
-14.54%
Bonds payable
450,500
189,600
260,900
137.61%
Capital stock
2,100,000
1,769,300
330,700
18.69%
Retained earnings
566,930
550,850
16,080
2.92%
Total
$ 3,337,850
$ 2,783,250
$
%
554,600
19.93%
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Your answer is partially correct. Try again. |
Answer each of the questions in the following unrelated situations.
(a) The current ratio of a company is 5:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $492,400, what is the amount of current liabilities?
|
Current Liabilities |
$ |
(b) A company had an average inventory last year of $209,000 and its inventory turnover was 5. If sales volume and unit cost remain the same this year as last and inventory turnover is 9 this year, what will average inventory have to be during the current year?
(Round answer to 0 decimal places, e.g. 125.)
|
Average Inventory |
(c) A company has current assets of $88,790 (of which $37,160 is inventory and prepaid items) and current liabilities of $37,160. What is the current ratio? What is the acid-test ratio? If the company borrows $13,870 cash from a bank on a 120-day loan, what will its current ratio be? What will the acid-test ratio be?
(Round answers to 2 decimal places, e.g. 2.50.)
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Current Ratio |
:1 |
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Acid Test Ratio |
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New Current Ratio |
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New Acid Test Ratio |
(d) A company has current assets of $605,100 and current liabilities of $239,000. The board of directors declares a cash dividend of $191,200. What is the current ratio after the declaration but before payment? What is the current ratio after the payment of the dividend?
(Round answers to 2 decimal places, e.g. 2.50.)
Current ratio after the declaration but before payment
:1
Current ratio after the payment of the dividend
:1, Corrected answer 1.73:1
New Answer – Current ratio after the payment of the dividend 1.73:1
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Presented below are comparative balance sheets for the Gilmour Company. GILMOUR COMPANY December 31 2013 2012 Assets Cash $180,200 $275,700 Accounts receivable (net) 220,400 154,300 Short-term investments 270,100 149,400 Inventories 1,061,000 980,700 Prepaid expenses 24,140 24,140 Fixed assets 2,585,600 1,949,300 Accumulated depreciation (1,000,900 ) (750,100 ) $3,340,540
$2,783,440
Liabilities and Stockholders’ Equity Accounts payable $50,700 $75,180 Accrued expenses 169,500 200,500 Bonds payable 450,100 190,600 Capital stock 2,100,000 1,770,300 Retained earnings 570,240
546,860
$3,340,540
$2,783,440
|
|
GILMOUR COMPANY |
( 750,100 |
|
(b) Prepare a comparative balance sheet of Gilmour Company showing the dollar change and the percent change for each item. GILMOUR COMPANY December 31
Increase or (Decrease) Assets 2013
2012
$ Change
% Change Cash $ 180,200 $ 275,700 $ % Accounts receivable (net) 220,400 154,300 Short-term investments 270,100 149,400 Inventories 1,061,000 980,700 Prepaid expenses 24,140 24,140 Fixed assets 2,585,600 1,949,300 Accumulated depreciation ( 1,000,900 ) ( 750,100 ) Total $ 3,340,540
$ 2,783,440
$ %
Liabilities and Stockholders’ Equity Accounts payable $ 50,700 $ 75,180 $ % Accrued expenses 169,500 200,500 Bonds payable 450,100 190,600 Capital stock 2,100,000 1,770,300 Retained earnings 570,240
546,860
Total $ 3,340,540
$ 2,783,440
$ % |
Robbins Company is a wholesale distributor of professional equipment and supplies. The company’s sales have averaged about $900,000 annually for the 3-year period 2011-2013. The firm’s total assets at the end of 2013 amounted to $850,000.
The president of Robbins Company has asked the controller to prepare a report that summarizes the financial aspects of the company’s operations for the past 3 years. This report will be presented to the board of directors at their next meeting.
In addition to comparative financial statements, the controller has decided to present a number of relevant financial ratios which can assist in the identification and interpretation of trends. At the request of the controller, the accounting staff has calculated the following ratios for the 3-year period 2011–2013.
2011
2012
2013
Current ratio
1.80
1.89
1.96
Acid-test (quick) ratio
1.04
0.99
0.87
Accounts receivable turnover
8.75
7.71
6.42
Inventory turnover
4.91
4.32
3.72
Total debt to total assets
51.0
%
46.0
%
41.0
%
Long-term debt to total assets
31.0
%
27.0
%
24.0
%
Sales to fixed assets (fixed asset turnover)
1.58
1.69
1.79
Sales as a percent of 2011 sales
1.00
1.03
1.05
Gross margin percentage
36.0
%
35.1
%
34.6
%
Net income to sales
6.9
%
7.0
%
7.2
%
Return on total assets
7.7
%
7.7
%
7.8
%
Return on stockholders’ equity
13.6
%
13.1
%
12.7
%
In preparation of the report, the controller has decided first to examine the financial ratios independent of any other data to determine if the ratios themselves reveal any significant trends over the 3-year period.
|
The current ratio is increasing while the acid-test (quick) ratio is decreasing. Using the ratios provided, identify and explain the contributing factor(s) for this apparently divergent trend. Link to Text |
|
In terms of the ratios provided, what conclusion(s) can be drawn regarding the company’s use of financial leverage during the 2011–2013 period? Link to Text |
|
Using the ratios provided, what conclusion(s) can be drawn regarding the company’s net investment in plant and equipment? |
Howser Inc. is a manufacturer of electronic components and accessories with total assets of $20,000,000. Selected financial ratios for Howser and the industry averages for firms of similar size are presented below.
Howser
2013
Industry
Average
2011
2012
2013
Current ratio
2.09
2.27
2.51
2.24
Quick ratio
1.15
1.12
1.19
1.22
Inventory turnover
2.40
2.18
2.02
3.50
Net sales to stockholders’ equity
2.75
2.80
2.95
2.85
Net income to stockholders’ equity
0.14
0.15
0.17
0.11
Total liabilities to stockholders’ equity
1.41
1.37
1.44
0.95
Howser is being reviewed by several entities whose interests vary, and the company’s financial ratios are a part of the data being considered. Each of the parties listed below must recommend an action based on its evaluation of Howser’s financial position.
Citizens National Bank. The bank is processing Howser’s application for a new 5-year term note. Citizens National has been Howser’s banker for several years but must reevaluate the company’s financial position for each major transaction.
Charleston Company. Charleston is a new supplier to Howser and must decide on the appropriate credit terms to extend to the company.
Shannon Financial. A brokerage firm specializing in the stock of electronics firms that are sold over-the-counter, Shannon Financial must decide if it will include Howser in a new fund being established for sale to Shannon Financial’s clients.
Working Capital Management Committee. This is a committee of Howser’s management personnel chaired by the chief operating officer. The committee is charged with the responsibility of periodically reviewing the company’s working capital position, comparing actual data against budgets, and recommending changes in strategy as needed.
|
Describe the analytical use of each of the six ratios presented above. Link to Text |
|
For each of the four entities described above, identify two financial ratios, that would be most valuable as a basis for its decision regarding Howser. Link to Text |
|
Discuss what the financial ratios presented in the question reveal about Howser. Support your answer by citing specific ratio levels and trends as well as the interrelationships between these ratios. |
6.58
77.40
70.03
-29.96
-26.95
100
100
1.52
2.70
5.07
7.20
5.58
13.47
6.85
62.86
63.60
17.07
19.65
100
100
-95,500
-34.64%
8.07
66,100
42.84%
120,700
80.79%
8.19%
0
636,300
32.64%
5.38
-250,800
33.44%
557,100
20.01%
-24,480
-32.56%
-31,000
-15.46%
259,500
136.15%
31.74
329,700
18.62%
23,380
4.28%
557,100
20.01%
35.19
0.74
0.89
77.45
70.04
(29.97)
(26.95)
100
100
1.50
2.66
5.11
7.16
13.50
6.81
62.91
63.57
16.98
19.79
100
5.39
100
123100
116111
2.39
1.39
2.01
1.28
1.41
1.71
9.88
5.39
9.91
6.60
5.54
8.09
5.37
31.76
35.23
0.72
0.87
