Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Q1) Cross-sectional ratio analysis

Use financial statements below for Fox Manufacturing Company for year ended December 31, 2006, along with industry average ratios also given in what follows, to:

a. Create and interpret complete ratio analysis of firm's 2006 operations.

b. Summarize the findings and make recommendations.

Note: INTERMEDIATE

Fox Manufacturing Company
Income Statement for the Year Ended December 31, 2006 
Sales revenue  $600,000
Less: Cost of goods sold  460,000
Gross profits  $140,000
Less: Operating expenses 
General and administrative expenses  $30,000

 

Fox Manufacturing Company
Income Statement for the Year Ended December 31, 2006 
Depreciation expense  30,000
Total operating expense  60,000
Operating profits  $80,000
Less: Interest expense  10,000
Net profits before taxes  $70,000
Less: Taxes  27,100
Net profits after taxes (earnings available for common stockholders)  $42,900
Earnings per share (EPS)  $2.15

 

Fox Manufacturing Company
Balance Sheet December 31, 2006 
Assets 
Cash  $15,000
Marketable securities  7,200
Accounts receivable  34,100
Inventories  82,000
Total current assets  $138,300
Net fixed assets  270,000
Total assets  $408,300
Liabilities and Stockholders' Equity 
Accounts payable  $57,000
Notes payable  13,000
Accruals  5,000
Total current liabilities  $75,000

 

Fox Manufacturing Company
Balance Sheet December 31, 2006
Assets
Long-term debt $150,000
Stockholders' equity
Common stock equity (20,000 shares outstanding) $110,200
Retained earnings 73,100
Total stockholders' equity $183,300
Total liabilities and stockholders' equity $408,300

 

Ratio Industry average, 2006
Current ratio 2.35
Quick ratio 0.87
Inventory turnovera 4.55
Average collection perioda 35.8 days
Total asset turnover 1.09
Debt ratio 0.300

 

Ratio Industry average, 2006
Times interest earned ratio 12.3
Gross profit margin 0.202
Operating profit margin 0.135
Net profit margin 0.091
Return on total assets (ROA) 0.099
Return on common equity (ROE) 0.167
Earnings per share (EPS) $3.10

Based on a 365-day year and on end-of-year figures.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M922131

Have any Question? 


Related Questions in Accounting Basics

Section i multiple choicemark one box only to indicate the

Section I: Multiple Choice Mark one box only to indicate the answer you consider correct for each question 1. Which of the following is the goal of the U.S. health care system? a. Access b. Cost c. Quality d. All of the ...

Questionsq1 discuss how the sec has influence if any over

Questions: Q1: Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc. Q2: Discuss the essential activities involved in the initial planning of an audit. How do these all specifically to the ...

Selected t-accounts of moore company are given below for

Selected T-accounts of Moore Company are given below for the just completed year: Raw Materials Manufacturing Overhead ________________________________________ Bal. 1/1 29,800 ________________________________________ Cre ...

Problem 3-2 lo 2 simple equity method adjustments

Problem 3-2 (LO 2) Simple equity method adjustments, consolidated worksheet. On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital ...

Accounting systems and assurance assessment internal

Accounting Systems and Assurance Assessment: Internal Control and information quality Accounting students learn how to process, analyse and use accounting information. It is also necessary to learn what contributes to th ...

Accounting and societyrequirementsbackgroundin their annual

Accounting and Society Requirements: Background: In their annual report, companies are required to include a remuneration report that documents the remuneration packages of the chief executive officer, other key executiv ...

Question 1 ldquoaccountancy is an information systemrdquo

Question 1. “Accountancy is an Information System”. Do you agree? Substantiate your answer with reasons. How does an Accountant help in planning and controlling a large commercial organization? Explain.    Question 2. Th ...

Discussion 1 and 2discussion 1select one of the following

Discussion 1 and 2 Discussion 1 Select one of the following tools: the nine steps in Ackerman and Anderson's roadmap for change, Cummings and Worley's five dimensions of leading and managing change, or the three componen ...

1 the manufacture of herbal health tonic is a competitive

1. The manufacture of herbal health tonic is a competitive industry. The manufacturing facilities have an annual output of 100,000 gallons. Operating costs are $2 per gallon. A 100,000 gallon capacity plant costs $500,00 ...

Assignment descriptiona manufacturing company is thinking

Assignment Description A manufacturing company is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year thereafter. Direct costs including ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen