Ratio Analysis
The following are Brenham Corporation's 2010 and 2011 balance sheets and income statements.
|
|
2010
|
|
2011
|
|
Cash
|
$120,000
|
|
$140,000
|
|
Accounts Receivable
|
190,000
|
|
215,000
|
|
Inventory
|
240,000
|
|
260,000
|
|
Buildings and Equipment
|
275,000
|
|
250,000
|
|
Intangible Assets
|
75,000
|
|
67,500
|
|
Total Assets
|
$900,000
|
|
$932,500
|
|
|
|
|
|
|
Accounts Payable
|
$400,000
|
|
$420,000
|
|
Bonds Payable (Long-Term)
|
200,000
|
|
125,000
|
|
Common Stock
|
30,000
|
|
30,000
|
|
Additional Paid-In Capital
|
175,000
|
|
175,000
|
|
Retained Earnings
|
95,000
|
|
182,500
|
|
Total Liabilities and Stockholders' Equity
|
$900,000
|
|
$932,500
|
|
|
|
2010
|
|
2011
|
|
Sales
|
$1,000,000
|
|
$1,200,000
|
|
Cost of Goods Sold
|
(600,000)
|
|
(784,000)
|
|
Gross Profit
|
$400,000
|
|
$416,000
|
|
Advertising Expense
|
(25,000)
|
|
(65,000)
|
|
Depreciation Expense
|
(40,000)
|
|
(51,040)
|
|
Office Supplies Expense
|
(20,000)
|
|
(22,500)
|
|
Interest Expense
|
(40,000)
|
|
(30,000)
|
|
Provision for Income Tax Expense
|
(189,000)
|
|
(159,960)
|
|
Net Income
|
$86,000
|
|
$87,500
|
(a) Calculate Brenham's current ratio at Dec 31, 2010 and Dec 31, 2011.
(b) Calculate Brenham's working capital at Dec 31, 2010 and Dec 31, 2011.
(c) Calculate Brenham's debt to equity ratio at Dec 31, 2010 and Dec 31, 2011.