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MugsCompany
ComparativeBalance Sheet
December 31,2007 2007 2006
Assets
Cash $ 25,000 $40,000
Marketablesecurities 20,000 60,000
AccountsReceivable (net) 40,000 30,000
Inventory 150,000 170,000
Property,plantand equipment (net) 170,000 200,000
Total Assets $405,000 $500,000
Liabilities and stockholders' equity
Accountspayable $ 25,000 $ 30,000
BondInterest payable 40,000 90,000
Bondspayable 75,000 160,000
CommonStock 175,000 145,000
Retainedearnings 90,000 75,000
Totalliabilities and stockholders' equity $405,000 $500,000

MugsCompany
IncomeStatement
Forthe Year Ended 12/31/07
NetSales $360,000
Costof goods sold 184,000
Grossprofit 176,000
Expenses
InterestExpense $21,000
SellingExpense 30,000
AdministrativeExpenses 20,000
Totalexpenses 71,000
Income beforeincome taxes 105,000
Income taxexpense 30,000
NetIncome $75,000

AdditionalInformation:

  1. Cashdividends of $50,000 were declared and paid in 2007.
  2. Weighted averagenumber of shares of common stock outstanding during 2007 were62,000 shares.
  3. Market value ofcommon stock on December 31,2007 was $15 per share.
  4. Netcash provided by operating activities for 2007 was$65,000.

Using thefinancial statements and additional information, compute thefollowing ratios for the Mugs Company for 2007. You need to labelyour ratios and show your calculations for maximumcredit.

  1. Currentratio
  2. Return oncommon stockholders' equity
  3. Price-earningsratio
  4. Inventoryturnover ratio
  5. Average daysin inventory
  6. Receivableturnover
  7. Average daysto collect receivables
  8. Profit marginratio
  9. Payoutratio
  10. Return onassets


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Deanna Hettinger
Deanna HettingerLv2
28 Sep 2019

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Financial Statement Analysis (Short Answer)




Mugs Company


Comparative Balance Sheet


December 31, 2007 2007 2006



Assets


Cash $25,000 $40,000


Marketable securities 20,000 60,000


Accounts Receivable (net) 40,000 30,000


Inventory 150,000 170,000


Property,plant


and equipment (net) 170,000 200,000


Total Assets $405,000 $500,000



Liabilities and stockholders' equity


Accounts payable $ 25,000 $ 30,000


Bond Interest payable 40,000 90,000


Bonds payable 75,000 160,000


Common Stock 175,000 145,000


Retained earnings 90,000 75,000


Total liabilities and


stockholders' equity $405,000 $500,000







Mugs Company


Income Statement


For the Year Ended 12/31/07


Net Sales $360,000


Cost of goods sold 184,000


Gross profit 176,000


Expenses


Interest Expense $21,000


Selling Expense 30,000


Administrative Expenses 20,000


Total expenses 71,000


Income before income taxes 105,000


Income tax expense 30,000


Net Income $75,000





Additional Information:



Cash dividends of $50,000 were declared and paid in 2007.


Weighted average number of shares of common stock outstandingduring 2007 were 62,000 shares.


Market value of common stock on December 31,2007 was $15 pershare.


Net cash provided by operating activities for 2007 was $65,000.


Using the financial statements and additional information, computethe following ratios for the Mugs Company for 2007. You need tolabel your ratios and show your calculations for maximum credit. (Iknow that's tedious, but it's very difficult to give partial creditfor incorrect answers if I can't see how you made thecalculation.)




1. Current ratio


2. Return on common stockholders' equity


3. Price-earnings ratio


4. Inventory turnover ratio


5. Average days in inventory


6. Receivable turnover


7. Average days to collect receivables


8. Profit margin ratio


9. Payout ratio


10.Return on assets (Points : 20)





1. The financial statements ofGaines Company appear below: GAINES COMPANY Comparative BalanceSheet December 31, �������������������������������������������Assets 2013 2012 Cash................................................................................................... $25,000 $ 40,000 Short-terminvestments...................................................................... 15,000 60,000 Accounts receivable(net).................................................................. 50,000 30,000Inventory........................................................................................... 50,000 70,000 Property, plant and equipment(net).................................................. 260,000 300,000 Total assets.................................................................................. $400,000 $500,000 Liabilities and stockholders' equity Accountspayable............................................................................... $20,000 $ 30,000 Short-term notespayable................................................................... 30,000 90,000 Bondspayable................................................................................... 90,000 160,000 Commonstock................................................................................... 150,000 150,000 Retainedearnings.............................................................................. 110,000 70,000 Totalliabilities and stockholders'equity...................................... $400,000 $500,000 GAINES COMPANY Income Statement For the Year EndedDecember 31, 2013 Netsales............................................................................................. $400,000 Cost of goodssold............................................................................. 240,000 Grossprofit........................................................................................ 160,000 Expenses Operatingexpenses...................................................................... $42,000 Interestexpense........................................................................... 18,000 Totalexpenses........................................................................ 60,000 Income before incometaxes.............................................................. 100,000 Income taxexpense........................................................................... 30,000 Netincome......................................................................................... $ 70,000 Additional information: a. Cashdividends of $23,000 were declared and paid in 2013.b. Weighted-average number of shares ofcommon stock outstanding during 2013 was 30,000 shares.c. Market value of common stock on December31, 2013, was $21 per share. Required: Using the financialstatements and additional information, compute the following ratiosfor Gaines Company for 2013. Show all computations. (20 min.) 1. Current ratio1.8:1 (90,000/50,000) 2. Return on commonstockholders' equity _________. 3. Price-earnings ratio _________. 4. Acid-test ratio_________. 5. Receivables turnover _________. 6. Times interest earned _________. 7. Profit margin_________. 8. Days ininventory _________. 9. Payout ratio 32.8% 10. Return on assets_________.

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