Question 1:
The LACAL Company sells computer parts through a retail store that it operates. The firm's comparative income statement and balance sheet for the years 2013 and 2012 are shown below.
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The LACAL Company
Comparative Income Statement
For Years Ended December 31, 2013 and 2012
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Amounts
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2013
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2012
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Net Sales
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486,000
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450,000
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Cost of Goods Sold
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218,700
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180,000
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Gross Profit on Sales
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267,300
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270,000
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Operating Expenses
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Selling Expenses
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72,900
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90,000
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General and Administrative Expenses
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68,040
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72,000
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Total Operating Expenses
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140,940
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162,000
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Net Income Before Income Taxes
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126,360
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108,000
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Income Tax Expense
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37,908
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27,000
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Net Income After Income Taxes
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88,452
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81,000
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The LACAL Company
Comparative Balance Sheet
December 31, 2013 and 2012
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Amounts
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2013
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2012
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Assets
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Current Assets
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Cash
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122,500
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70,000
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Accounts Receivable
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315,000
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280,000
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Merchandise Inventory
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262,500
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210,000
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Total Current Assets
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700,000
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560,000
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Property, Plant, and Equipment
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Land
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227,500
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140,000
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Building and Equipment
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822,500
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700,000
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Total Property, Plant, and Equipment
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1,050,000
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840,000
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Total Assets
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1,750,000
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1,400,000
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Liabilities and Stockholders' Equity
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Current Liabilities
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Accounts Payable
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385,000
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280,000
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Other Payable
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52,500
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70,000
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Total Current Liabilities
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437,500
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350,000
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Long-Term Liabilities
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Mortgage Payable
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504,000
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487,452
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Total Long-Term Liabilities
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504,000
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487,452
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Total Liabilities
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941,500
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837,452
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Stockholders' Equity
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Common Stock
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262,500
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210,000
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Paid-in Capital - Common Stock
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245,000
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140,000
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Retained Earnings
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301,000
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212,548
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Total Stockholders' Equity
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808,500
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562,548
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Total Liabilities and Stockholders' Equity
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1,750,000
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1,400,000
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Additional Information:
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2013
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2012
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2011
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Inventory
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206,000
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Number of Common Shares Outstanding
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262,500
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210,000
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210,000
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Assume all sales are credit sales.
Part I -
1. Calculate the current ratio for 2012 and 2013.
2. Calculate the acid-test ratio for 2012 and 2013.
3. Calculate the inventory turnover for 2012 and 2013.
4. Calculate the return on sales for 2012 and 2013.
5. Calculate the earnings per share of common stock for 2012 and 2013.
6. Calculate the book value per share of common stock for 2012 and 2013.
7. Calculate the return on total assets for 2012 and 2013.
8. Calculate the ratio of stockholders' equity to total equities for 2012 and 2013.
9. Calculate the rate of return on stockholders' equity for 2012 and 2013.
10. Calculate the asset turnover for 2012 and 2013.
Question 2:
Using the following additional information, fill in the missing values:
1. Accounts Receivable increased 20 percent from 2012 to 2013.
2. There were no new purchases of land, property, or equipment in 2013.
3. Accounts Payable increased 10 percent from 2012 to 2013.
4. No new shares of common stock were issued in 2013.
5. The company paid out cash dividends of $50,000 in 2013.
6. The inventory turnover ratio for 2013 was 6 times.
7. The asset turnover ratio in 2013 was 2.4 times and in 2012 was 2.3 times.
8. The earnings per share in 2013 was $29.25 and in 2012 was $19.425.
9. The income tax rate in both years was 25 percent.
Produce Sales Company's condensed income statement for the years 2013 and 2012.
Produce Sales Company's condensed balance sheet for the years 2013 and 2012.
Analyze:
Assume that the management of Produce Sales Company had been given a directive by the board of directors to improve the company's current ratio in 2013. Did the company improve its standing in this regard from 2012?