Question

PART 3: Case study: ABC Farm Supply Store Use the following condensed financial statements (Table 10.5...

PART 3: Case study: ABC Farm Supply Store

Use the following condensed financial statements (Table 10.5 and Table 10.6) from the ABC Farm Supply Store, calculate and interpret at least one profitability, liquidity, and solvency ratio.

Table 10.5 ABC Farm Supply Store condensed balance sheet

Assets Current Assets
Cash $ 171,000 Accounts receivable 698,000 Inventory 897,000 Total current assets $1,766,000 Total fixed assets 2,482,000 Total assets $4,248,000

Liabilities and Owner’s Equity
Current Liabilities Accounts payable $483,000 Notes payable 565,000 Total current liabilities $1,048,000 Long-term liabilities 2,000,000 Total liabilities $3,048,000 Owner’s contribution $1,000,000 Retained earnings 200,000 Total Owner’s Equity Total liabilities and owner’s equity $1,200,000 $4,248,000   


Table 10.6 ABC Farm Supply Store condensed income statement

Net Sales $5,215,000 Cost of goods sold 3,285,450 Gross margin $1,929,550 Operating expenses 1,202,423 Administrative expenses 320,646 Other expenses 80,161 Total operating expenses $1,603,230 Net operating income $326,320 Interest expense 152,400 Net income before taxes $173,920 Income tax 42,480 Net income after taxes $131,440

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1) profitability ratio

Net profit margin ratio = net income / net sale × 100

= 131,440 / 5,215,000 × 100

= 2.52%

Net profit margin ratio is final picture of company which measure company's profit after deducting all expense. 2.52% is lower profit margin ratio.

2) liquidity ratio

Current ratio = current assets / current liabilities

= 1,766,000 / 1,048,000

= 1.68

Current ratio shows the ability of company to pay its current liabilities by current assets. Current assets double than current liabilities is favourable for company and 1.68 is good current ratio.

3) solvency ratio

Debt to assets ratio = total debt / total assets

= 3,048,000 / 4,248,000

= 0.72

Debt to assets ratio helps the company to measure the portion of debt financing in total assets. Ratio indicates that company's assets are 70% financed by debt

  

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Canadian Bacon Inc. financial statements are presented in the table below.             Based on the information in...
Canadian Bacon Inc. financial statements are presented in the table below.             Based on the information in the table, and using a 365-day year, calculate operating cycle. Round the answers to two decimal places    Balance Sheet December 31, 2014 Cash and marketable securities $132,000 Accounts payable $399,000 Accounts receivable $311,000 Notes payable $98,500 Inventories $512,000 Accrued expenses $89,300 Prepaid expenses $11,300 Total current liabilities $586,800 Total current assets $966,300 Long-term debt $799,400 Gross fixed assets $2,104,000 Par value and paid-in-capital...
Using the condensed summary financial statements for Eli Lilly & Company (included on the following page),...
Using the condensed summary financial statements for Eli Lilly & Company (included on the following page), calculate the following ratios for Eli Lilly for 2019: Current Ratio Accounts Receivable Turnover Average Days in Inventory (also known as Average Days to Sell Inventory) Gross Profit Percentage Debt to Assets Ratio PROBLEM 3, continued Eli Lilly & Company Summary Condensed Balance Sheet $ in Millions Assets Dec. 31, 2019 Dec. 31, 2018 Liabilities and Equity Dec. 31, 2019 Dec. 31, 2018 Cash...
A farm business manager has just finished preparing end of year financial statements for the business....
A farm business manager has just finished preparing end of year financial statements for the business. The following financial information was determined:             Current assets – beginning of year                             $200,000             Total assets – beginning of year                                 $600,000             Current liabilities – beginning of year                        $100,000             Total liabilities – beginning of year                            $150,000             Total equity – beginning of year                                 $450.000             Current assets – end of year                                        $250,000             Total assets – end of year                                           $800,000             Current liabilities – end of year                                  $150,000                                                         Total liabilities – end of year                                      $300,000             Total equity – end...
Solve in excel plz and show work Financial Statements ABC CORPORATION Balance Sheet Year Ended December...
Solve in excel plz and show work Financial Statements ABC CORPORATION Balance Sheet Year Ended December 31 (in $ millions) Assets 2006 2005 Liabilities & Stockowner’s Equity 2006 2005 Current Assets Current Liabilities Cash 22.2 19.5 Accounts Payable 29.2 24.5 Accounts Receivables 18.5 13.2 Notes Payable / Short-Term Debt 4.5 3.2 Inventories 14.2 14.3 Current Maturities of Long-Term Debt 13.3 12.3 Other Current Assets 2.0 1.0 Other Current Liabilities 3.0 4.0 Total Current Assets 56.9 48.0 Total Current Liabilities 50.0...
Below you can find the comparative financial statements of company “ABC” in € for 2017 and...
Below you can find the comparative financial statements of company “ABC” in € for 2017 and 2018: Comparative Balance Sheet of “ABC” Assets 2018 2017 Liabilities & Stockholders’ Equity 2018 2017 Fixed Assets Property, Plant and Equipment Goodwill Other Assets Total Fixed Assets Current Assets Cash and Cash Equivalents Accounts receivables Inventory Prepaid Expenses Other current assets Total Current Assets Total Assets 53,000 14,200 9,520 76,720 1,500 11,600 15,300 540 280 29,220 105,940 56,000 14,200 10,240 80,440 1,660 14,000 14,820...
The Balance Sheet and the Income Statement for ABC Manufacturing Corporation are as follows: DATA (All...
The Balance Sheet and the Income Statement for ABC Manufacturing Corporation are as follows: DATA (All amounts in SAR unless otherwise indicated, all sales are on credit and no hard keys.) Balance Sheet: ABC Corporation Balance Sheet Other current assets Total current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets LIABILITIES (DEBT) AND EQUITY Accounts payable Short-term notes payable Total current liabilities Long-term debt Total liabilities Common stock (par & paid in capital) Retained earnings Total common...
The condensed financial statements of Ness Company for the years 2019 and 2020 are presented below....
The condensed financial statements of Ness Company for the years 2019 and 2020 are presented below. Ness Company Balance Sheets December 31 (in thousands) 2020 2019 Current assets    Cash and cash equivalents $360 $320    Accounts receivable (net) 510 380    Inventory 430 420    Prepaid expenses 120 140       Total current assets 1,420 1,260 Property, plant, and equipment (net) 430 360 Investments 1 10 Intangibles and other assets 480 550       Total assets $2,331 $2,180 Current liabilities $870 $860 Long-term liabilities 411 270 Stockholders’...
     The following table shows Toshiba's financial statements Assets: Amount Cash and marketable securities $400,000 Accounts...
     The following table shows Toshiba's financial statements Assets: Amount Cash and marketable securities $400,000 Accounts receivable 1,415,000 Inventories    1,847,500 Prepaid expenses 24,000 Total current assets 3,686,500 Fixed assets        2,800,000 Less: accum. depr. (1,087,500) Net fixed assets 1,712,500 Total assets $5,399,000 Liabilities: Accounts payable $600,000 Notes payable   875,000 Accrued taxes 92,000 Total current liabilities $1,567,000 Long-term debt 900,000 Common Stock (100,000 shares) 700,000 Retained Earnings 2,232,000 Total liabilities and owner's equity $5,399,000 Net sales (all credit) $6,375,000 Less: Cost of...
A firm's financial statements for the current year are as follows (in millions of dollars).      ...
A firm's financial statements for the current year are as follows (in millions of dollars).                                   Balance Sheet              Assets                                Liabilities and Equity          Cash                         $0.5           Accounts Payable         $0.4          Accounts Receivable     0.7    Accrued Liabilities           0.2          Inventory                 0.4         Notes Payable            0.3                                          Current Assets           1.6         Current Liabilities            0.9               Net Fixed Assets         2.5          Long-term Debt                  1.7                                    Common Equity            1.5     ...
1. You standardize a company’s financial statements as follows. Following the example of Bega Cheese in...
1. You standardize a company’s financial statements as follows. Following the example of Bega Cheese in the textbook, please calculate the following items:             a. NOPAT             b. Net operating working capital c. Net long-term assets             d. Net debt BALANCE SHEET ASSETS INCOME STATEMENT Cash and Marketable Securities 11,511.00 Accounts Receivable 4,430.00 Sales 35,200.00 Inventory 2,650.00 Cost of Goods Sold 11,234.00 Other Current Assets 2,988.00 Gross Profit 23,966.00 Total Current Assets 21,579.00 SG&A 13,179.00 Other Operating Expenses 1,703.00 Long-Term...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT