1. The following calculations have been made for Coos Company:
Growth Rate
Net sales 10.5%
Total accounts receivable 21.3%
Allowance for doubtful accounts 2.6%
Current Year Prior Year
Allowance for doubtful accounts as a
percentage of total accounts receivable 3.8% 5.4%
Analyze the accounts receivable and allowance for doubtful accounts
2. Use the following common size balance sheet to answer the questions below:
a) Explain what has happened to current assets and long-term assets.
b) Explain the changes in the liabilities section of the balance sheet.
c) What has occurred to Retained Earnings at year-end? What is the company's financial position?
BALANCE SHEET
| Current assets: |
2011 |
2010 |
|
|
|
| Cash |
3% |
5% |
| Accounts receivable |
20 |
18 |
| Inventory |
35 |
30 |
| Total current assets |
58% |
53% |
| Property, plant and equipment |
30 |
40 |
| Other assets |
12 |
7 |
| Total assets |
100% |
100% |
|
|
|
| Current liabilities: |
|
|
| Accounts payable |
25% |
20% |
| Short-term debt |
38 |
33 |
| Total current liabilities |
63% |
3% |
| Long-term debt |
22 |
17 |
| Total liabilities |
85% |
70% |
| Common stock and paid in capital |
14 |
20 |
| Retained earnings |
1 |
10 |
| Total stockholders' equity |
15% |
30% |
| Total liabilities and stockholders' equity |
100% |
100% |