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Given the following financial statements historical ratios, and industry averages, calculate Sterling Com most recent year. (Assume a 365-day year.)

Given the following financial statements historical ratios, and industry averages, calculate Sterling Com most recent year. (Assume a 365-day year.)

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 40E: Cuneo Companys income statements for the last 3 years are as follows: Refer to the information for...
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Notes:

a. The firm has an 8-year financial lease requiring annual beginning-of-year payments of $50,000. Five years of the lease have yet to run.

b. Annual credit purchases of $6,200,000 were made during the year.

c. The annual principal payment on the long-term debt is $100,000.

d. On December 31, 2012, the firm's common stock closed at $39.50 per share.

Questions:

1. What is the current ratio?

2. What is the quick ratio?

3. What is the inventory turnover? 

Case 1 Given the following financial statements historical ratios, and industry averages, calculate Stering Company's financial ratios for the most recent year. (Assume a 365-day year.) Sterling Company Income Statement for the Year Ended December 31, 2012 I D.0000 7.500,.000 2500.000 Sales reverue Less Cost of Goods Sold Gross Profits Less: Operating expenses Selling espense Gereral and admiristralive expene 300.000 650.000 50.000 Lease espense Depreciation expense 200.000 Total operaling espense Operating profits Less Irterest erpense 1200.000 1300,000 200.000 Net profit before taxes Less Taxes (rale - 40) Net profit after taxes 100.000 440.000 660.000 Less: Preferred stock dvidenda 50.000 Eamrings avalable for common stockholders 610.000 Earings per share Sterling Company Bal arnce Sheet as of December 31, 2012 Assets Liabilities & Stockholdera' Equliy Accourts payable Notes payable Accruals Cash 200.000 s00.000 Marketable Securites Accounts receivable 50.00 200.000 800.000 0.000 1200,000 3.000.000 Inventories 950.000 Taal currert liabilities Total current assets 2000.000 Gros fixed assets (at cost) Long-term debt (include financial leases) Tolal liabilities 20000 4.200,000 300000 L000.000 Preferred stock (25,000 shares. $2 dividend) Common stiock (200.000 shares at $3 par) Paidin capital in excess of par value-common Less Accumulated depreciation Net fired asseta 9.000.000 600.000 Other assets 1000.000 12.00000 5.00.000 Total assets Relained earrings 1000.000 Total stockholders' equty Total liabilities & stockholders' equity 7.800.000 12.000.000
Transcribed Image Text:Case 1 Given the following financial statements historical ratios, and industry averages, calculate Stering Company's financial ratios for the most recent year. (Assume a 365-day year.) Sterling Company Income Statement for the Year Ended December 31, 2012 I D.0000 7.500,.000 2500.000 Sales reverue Less Cost of Goods Sold Gross Profits Less: Operating expenses Selling espense Gereral and admiristralive expene 300.000 650.000 50.000 Lease espense Depreciation expense 200.000 Total operaling espense Operating profits Less Irterest erpense 1200.000 1300,000 200.000 Net profit before taxes Less Taxes (rale - 40) Net profit after taxes 100.000 440.000 660.000 Less: Preferred stock dvidenda 50.000 Eamrings avalable for common stockholders 610.000 Earings per share Sterling Company Bal arnce Sheet as of December 31, 2012 Assets Liabilities & Stockholdera' Equliy Accourts payable Notes payable Accruals Cash 200.000 s00.000 Marketable Securites Accounts receivable 50.00 200.000 800.000 0.000 1200,000 3.000.000 Inventories 950.000 Taal currert liabilities Total current assets 2000.000 Gros fixed assets (at cost) Long-term debt (include financial leases) Tolal liabilities 20000 4.200,000 300000 L000.000 Preferred stock (25,000 shares. $2 dividend) Common stiock (200.000 shares at $3 par) Paidin capital in excess of par value-common Less Accumulated depreciation Net fired asseta 9.000.000 600.000 Other assets 1000.000 12.00000 5.00.000 Total assets Relained earrings 1000.000 Total stockholders' equty Total liabilities & stockholders' equity 7.800.000 12.000.000
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