1. The Sally Corporation's income statement is given below.
Sally Corporation
Sales.......................................$250,000
Cost of Goods Sold....................... 145,000
Gross Profit.................................105,000
Fixed Charges (other than interest)...... 25,000
Income before interest and taxes...........80,000
Interest.........................................20,000
Income before taxes......................... 60,000
Taxes (35%)................................... 21,000
Income after taxes............................$39,000
a. What is Sally's Time-Interest-Earned Ratio?
b. What is the Fixed-Charge-Coverage Ratio? Go to investopedia.com. Formula is given/will be posted in class.
c. What is the Net Profit Margin?
d. What is the Gross Profit Margin?
2. Given the following information, prepare, in good form, an income statement for the Dental Drilling Company as of December 31, 2008.
Selling and administrative expense $ 65,000
Depreciation expense 75,000
Sales 570,000
Interest expense 40,000
Cost of goods sold 240,000
Taxes 45,000
3. 5. The King Card Company has a return-on-assets (investment) ratio of 12 percent.
a. If the debt-to-total-assets ratio is 40 percent, what is the return on equity?
b. If the firm had no debt, what would the return-on-equity ratio be?
4. For ABC Corporation as of December 31, 2002 prepare a Balance Sheet in proper order based on the following information.
Arrange the following items in proper balance sheet presentation.
Accumulated depreciation $310,000
Retained earnings 88,000
Cash 20,000
Bonds payable 136,000
Accounts receivable 48,000
Plant and equipment-original cost 680,000
Accounts payable 35,000
Allowance for bad debts 16,000
Common stock $1 par, 100,000 shares outstanding 100,000
Inventory 56,000
Preferred stock, $50 par, 1,000 shares outstanding 50,000
Marketable securities 25,000
Investments 25,000
Notes payable 43,000
Capital paid in excess of par (common stock) 96,000
5. The cash account for Presley Corporation shows the following for the year ended December 31,2008.
Beginning cash balance . . . . . . . . . . $ ?
Cash receipts during year from:
Services . . . . . . . . . . . . . . . . . . . . . 2,214,000
Investments by owners . . . . . . . . . 93,000
Sale of land . . . . . . . . . . . . . . . . . . 194,000
Cash payments during year for:
Operating expenses . . . . . . . . . . . . 1,745,000
Taxes . . . . . . . . . . . . . . . . . . . . . . 203,000
Purchase of building . . . . . . . . . . . 355,000
Distributions to owners . . . . . . . . . 70,000
Ending cash balance . . . . . . . . . . . . . 815,000
Required:
Prepare a statement of cash flows for Presley Corporation for the year ended December 31,2008.