QUESTION #1
Using the following selected items from the comparative balance sheet of Anders Company, illustrate horizontal and vertical analysis.
December 31, 2009 December 31, 2008
Accounts Receivable $ 900,000 $ 600,000
Inventory 975,000 750,000
Total Assets 4,000,000 2,500,000
QUESTION #2
The financial statements of Dobson Company appear below:
DOBSON COMPANY
Comparative Balance Sheet
December 31,
Assets 2009 2008
Cash................................................................................................... $ 35,000 $ 40,000
Short-term investments..................................................................... 15,000 60,000
Accounts receivable (net).................................................................. 50,000 30,000
Inventory............................................................................................ 50,000 70,000
Property, plant and equipment (net).................................................. 250,000 300,000
Total assets ................................................................................. $400,000 $500,000
Liabilities and stockholders' equity
Accounts payable.............................................................................. $ 10,000 $ 30,000
Short-term notes payable.................................................................. 40,000 90,000
Bonds payable................................................................................... 88,000 160,000
Common stock.................................................................................. 160,000 145,000
Retained earnings.............................................................................. 102,000 75,000
Total liabilities and stockholders' equity....................................... $400,000 $500,000
DOBSON COMPANY
Income Statement
For the Year Ended December 31, 2009
Net sales............................................................................................ $360,000
Cost of goods sold............................................................................. 198,000
Gross profit........................................................................................ 162,000
Expenses
Interest expense.......................................................................... $12,000
Selling expenses.......................................................................... 40,000
Administrative expenses.............................................................. 59,000
Total expenses....................................................................... 111,000
Income before income taxes............................................................. 51,000
Income tax expense.......................................................................... 15,000
Net income........................................................................................ $ 36,000
Additional information:
a. Cash dividends of $9,000 were declared and paid in 2009.
b. Weighted-average number of shares of common stock outstanding during 2009 was 30,000 shares.
c. Market value of common stock on December 31, 2009, was $21 per share.
Instructions
Using the financial statements and additional information, compute the following ratios for Coulter Company for 2009. Show all computations.
Computations
1. Current ratio _________.
2. Return on common stockholders' equity _________.
3. Price-earnings ratio _________.
4. Acid-test ratio _________.
5. Receivables turnover _________.
6. Times interest earned _________.
7. Profit margin _________.
8. Days in inventory _________.
9. Payout ratio _________.
10. Return on assets _________.