Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Assignment: Ratio Analysis
Solve the problem below, calculate the ratios, interpret the results against the industry average, and fill in the table on the worksheet. Then, provide an analysis of how those results can be used by the business to improve its performance.
Balance Sheet as of December 31, 2010
Gary and Company
Cash
$45
Accounts payables
Receivables
66
Notes payables
45
Inventory
159
Other current liabilities
21
Marketable securities
33
Total current liabilities
$111
Total current assets
$303
Net fixed assets
147
Long Term Liabilities
Total Assets
$450
Long-term debt
24
Total Liabilities
$135
Owners Equity
Common stock
$114
Retained earnings
201
Total stockholders' equity
315
Total liabilities and equity
Income Statement Year 2010
Net sales
$795
Cost of goods sold
660
Gross profit
135
Selling expenses
73.5
Depreciation
12
EBIT
49.5
Interest expense
4.5
EBT
Taxes (40%)
18
Net income
27
1. Calculate the following ratios AND interpret the result against the industry average:
Ratio
Your Answer
Industry Average
Your Interpretation (Good-Fair-Low-Poor)
Profit margin on sales
3%
Return on assets
9%
Receivable turnover
16X
Inventory turnover
10X
Fixed asset turnover
2X
Total asset turnover
3X
Current ratio
Quick ratio
1.5X
Times interest earned
7X
2. Analysis:
Give your interpretation of what the ratios calculations show and how the business can use this information to improve its performance. Justify all answers.
The management of Austin Corporation is considering dropping product R97C. What would be the effect on the company's overall net operating income if product R97C were dropped?
MSM Company sells clothing for young adults. The firm has normal monthly fixed costs of $90,000 ($38,000 of this amount is fixed salaries). The firm's variable cost ratio averages 60%.
Static budgets present budgeted amounts based on fixed assumptions, whereas flexible budgets change base on activity level. A flexible budget is a static budget, restated at different leverls of activity.
The tractor is expected to last six years and have a residual value of $2,000. Determine the cost and depreciable cost of the tractor and calculate the first year's depreciation under the straight-line method.
The Wedding Shop (TWS) started the 2013 accounting period with the balances given in the financial statements model shown below. During 2013 TWS expierienced the following business events: Prepare a multistep income statement. Include common size per..
Following are the operating results of the two segments of Parklin Corporation: Segment A Segment B Total Sales $10,000 $15,000 $25,000 Variable costs of goods sold 4,000 8,500 12,500 Fixed costs of goods sold 1,500 2,500 4,000 Gross margin 4,500 4,0..
Explain the value and weaknesses of the Gordon model. Explain the how the price-to-earnings model is used to estimate the value of the stocks. Explain which of the 2 models seemed to be the most accurate in estimating the value of the stocks.
If Ms. McGonigle's proposal is adopted, how would the contract be reflected in the balance sheets at the end of 2008 and at the end of 2009?
To the firm, the use of debt capital can be risky (debt versus equity), while for the investor, the opposite is the case. Why do you suppose this is the case?
On the statement of cash flows, the cash flows from operating activities section would include
Journalize the transactions for June in a two-column journal. Post the journal entries to the T accounts, placing the date to the left of each amount to identify the transaction.
Ned Thompson Labs performs tests on super alloys, titanium, aluminium, and most metals. Tests on metal composites that rely upon scanning electron microscope results can be subcontracted or the labs can purchase new equipment.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd