Reference no: EM131437389
Financial and Managerial Accounting Midterm Examination- Financial Statement Analysis
Part 1 - Financial Analysis
The condensed financial statements of Aries Company for the years 20X5 and 20X6 are presented below.
Aries Company Balance Sheet December 31
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20X6
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20X5
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Current Assets
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|
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Cash and Equivalents
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£60
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£160
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Accounts Receivable (net)
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720
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640
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Inventory
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1080
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800
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Prepaid Expenses
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60
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80
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Total Current Assets
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1920
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1680
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Property, Plant and Equipment
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1520
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1400
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Investments
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20
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20
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Intangibles and Other Assets
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770
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640
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Total Assets
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4230
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3740
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Current Liabilities
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520
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420
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Long-Term Liabilities
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1720
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1440
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Stockholders' Equity--common
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1990
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1880
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Total Liabilities and Stockholders' Equity
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4230
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3740
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Aries Company Income Statements For the Years Ended December 31
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20X6
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20X5
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Sales Revenue
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£6,000
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£5,740
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Cost and Expenses
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Cost of Goods Sold
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4920
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4720
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Selling and Administrative Expenses
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560
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500
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Interest Expense
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160
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140
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Total Costs and Expenses
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5,640
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5,360
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Income Before Income Tax
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360
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380
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Income Tax Expense
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140
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150
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Net Income
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£ 220
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£ 230
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Compute the following ratios for 20X6 and 20X5.
(a) Current ratio.
(b) Inventory turnover. (Inventory on 12/31/X4 was £652.)
(c) Profit margin ratio.
(d) Return on assets. (Assets on 12/31/X4 were £3,480.)
(e) Return on common stockholders' equity. (Stockholders' equity on 12/31/X4 was £1760.)
(f) Debt to total assets ratio.
(g) Times interest earned.
Critically evaluate your ratio calculations and conclude on the current state of the company.
Word count 500 (+/- 10%)
Part 2 - Performance Evaluation
Evaluate the financial performance of a company of your choosing using the knowledge and technical skills that you have gained during the course so far. Provide a theoretical explanation of any ratio analysis. No need to recalculate ratios, often the financial reports provides these.
Attach the company financial statements as an appendix to your statement as reference to your work.
Present your findings in a Management Business Report wordage should be 1500 +/10%.
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