Problem - Ratios, common-size statements, and trend percents
Selected comparative financial statements of Bennington Company follow:
|
BENNINGTON COMPANY Comparative Income Statements For Years Ended December 31, 2012, 2011, and 2010
|
|
2012
|
2011
|
2010
|
|
Sales
|
$457,083
|
$350,163
|
$243,000
|
|
Cost of goods sold
|
275,164
|
219,202
|
155,520
|
|
Gross profit
|
181,919
|
130,961
|
87,480
|
|
Selling expenses
|
64,906
|
48,322
|
32,076
|
|
Administrative expenses
|
41,137
|
30,814
|
20,169
|
|
Total expenses
|
106,043
|
79,136
|
52,245
|
|
Income before taxes
|
75,876
|
51,825
|
35,235
|
|
Income taxes
|
14,113
|
10,624
|
7,153
|
|
Net income
|
461,763
|
$41,201
|
$28,082
|
|
BENNINGTON COMPANY Comparative Balance Sheets December 31, 2012, 2011, and 2010
|
|
2012
|
2011
|
2010
|
|
Assets
|
|
|
|
|
Current assets
|
$47,321
|
$37,023
|
49,491
|
|
Long-term investments
|
0
|
1,200
|
3,960
|
|
Plant assets, net
|
85,231
|
90,490
|
53,188
|
|
Total assets
|
$132,552
|
$128,713
|
106,639
|
|
Liabilities and Equity
|
|
|
|
|
Current liabilities
|
$19,353
|
$19,178
|
18,662
|
|
Common stock
|
71,000
|
71,000
|
53,000
|
|
Other paid-in capital
|
8,875
|
8,875
|
5,889
|
|
Retained earnings
|
33,324
|
29,660
|
29,088
|
|
Total liabilities and equity
|
$132,552
|
$128,713
|
106,639
|
Required:
1. Compute each year's current ratio.
2. Express the income statement data in common-size percents.
3. Express the balance sheet data in trend percents with 2010 as the base year.
Problem - Calculation of financial statement ratios
Selected year-end financial statements of McCord Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2010, were inventory, $53,900; total assets, $229,400; common stock, $95,000; and retained earnings, $52,348.)
|
McCORD CORPORATION Income Statement
For Year Ended December 31, 2011
|
|
Sales
|
$450,600
|
|
Cost of goods sold
|
297,450
|
|
Gross profit
|
153,150
|
|
Operating expenses
|
99,500
|
|
Interest expense
|
3,900
|
|
Income before taxes
|
49,750
|
|
Income taxes
|
20,041
|
|
Net income
|
$29,709
|
|
McCORD CORPORATION Balance Sheet December 31, 2011
|
|
|
Assets
|
|
Liabilities and Equity
|
|
|
Cash
|
$16,000
|
Accounts payable
|
$16,500
|
|
Short-term investments
|
8,800
|
Accrued wages payable
|
4,800
|
|
Accounts receivable, net
|
31,400
|
Income taxes payable
|
3,300
|
|
Notes receivable (trade)*
|
4,000
|
Long-term note payable, secured
|
|
|
Merchandise inventory
|
32,150
|
by mortgage on plant assets
|
65,400
|
|
Prepaid expenses
|
3,050
|
Common stock
|
95,000
|
|
Plant assets, net
|
153,300
|
Retained earnings
|
63,700
|
|
Total assets
|
$248,700
|
Total liabilities and equity
|
$248,700
|
* These are short-term notes receivable arising from customer (trade) sales.
Required: Compute the following.
(1) Current ratio
(2) Acid-test ratio
(3) Days' sales uncollected (including note)
(4) Inventory turnover
(5) Days' sales in inventory
(6) Debt-to-equity ratio
(7) Times interest earned
(8) Profit margin ratio
(9) Total asset turnover
(10) Return on total assets
(11) Return on common stockholders' equity