Q No.12 The December 31, 2015, balance sheet and income statement for Mayberry Cafeterias, Inc. are given; a. Compute the specified ratios, and compare them to the industry average (better or worse). b. If you were appointed financial manager of the company, what decisions would you make based on your findings? Balance Sheet Cash 17 Accounts Payable 7 Marketable Securities 5 Notes Payable 3 Accounts Receivable 3 Taxes Payable 2 Inventory 16 Other Accruals 3 Prepaid Expenses 6 Current Liabilities 15 Current Assets 47 Long-term debt 35 Gross plant and equipment 126 Preferred Stock 10 Less: Accumulated Dep. -57 Common Stock 20 Net Plant and Equipment 69 Capital contributed in excess of par 10 Retained Earnings 26 Total Assets 116 Total Liabilities and Stockholders’ equity 116 Income Statement Net Sales 1,072 Cost of Goods sold -921 Gross Profit 151 Selling Expense -86 General and Administrative expense -26 Depreciation -6 Operating Income 33 Interest Expense -4 Profit Before taxes 29 Taxes -12 Net Income 17 Ratios to Compute 2015 Better or Worse 2015 Industry Average (%) Mayberry Current 2.86 Quick 2.31 Debt-Equity 0.51 Times interest period 12.36 Average Collection period 1.06 Inventory Turnover 95.71 Fixed-asset turnover 16.15 Operating profit margin 0.036 Net profit margin 0.019 Book return on assets 0.192 Book return on equity 0.271

Q No.12 The December 31, 2015, balance sheet and income statement for Mayberry Cafeterias, Inc. are given; a. Compute the specified ratios, and compare them to the industry average (better or worse). b. If you were appointed financial manager of the company, what decisions would you make based on your findings? Balance Sheet Cash 17 Accounts Payable 7 Marketable Securities 5 Notes Payable 3 Accounts Receivable 3 Taxes Payable 2 Inventory 16 Other Accruals 3 Prepaid Expenses 6 Current Liabilities 15 Current Assets 47 Long-term debt 35 Gross plant and equipment 126 Preferred Stock 10 Less: Accumulated Dep. -57 Common Stock 20 Net Plant and Equipment 69 Capital contributed in excess of par 10 Retained Earnings 26 Total Assets 116 Total Liabilities and Stockholders’ equity 116 Income Statement Net Sales 1,072 Cost of Goods sold -921 Gross Profit 151 Selling Expense -86 General and Administrative expense -26 Depreciation -6 Operating Income 33 Interest Expense -4 Profit Before taxes 29 Taxes -12 Net Income 17 Ratios to Compute 2015 Better or Worse 2015 Industry Average (%) Mayberry Current 2.86 Quick 2.31 Debt-Equity 0.51 Times interest period 12.36 Average Collection period 1.06 Inventory Turnover 95.71 Fixed-asset turnover 16.15 Operating profit margin 0.036 Net profit margin 0.019 Book return on assets 0.192 Book return on equity 0.271

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter4: Internal Control And Cash

Section: Chapter Questions

Problem 69.3C

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Q No.12 The December 31, 2015, balance sheet and income statement for Mayberry Cafeterias, Inc. are given;


a. Compute the specified ratios, and compare them to the industry average (better or worse).
b. If you were appointed financial manager of the company, what decisions would you make based on your findings?


Balance Sheet
Cash	17	Accounts Payable	7
Marketable Securities	5	Notes Payable	3
Accounts Receivable	3	Taxes Payable	2
Inventory	16	Other Accruals	3
Prepaid Expenses	6	Current Liabilities	15
Current Assets	47
		Long-term debt	35
Gross plant and equipment	126	Preferred Stock	10
Less: Accumulated Dep.	-57	Common Stock	20
Net Plant and Equipment	69	Capital contributed in excess of par	10
		Retained Earnings	26
Total Assets	116	Total Liabilities and Stockholders’ equity	116




Income Statement
Net Sales	1,072
Cost of Goods sold	-921
Gross Profit	151

Selling Expense	-86
General and Administrative expense	-26
Depreciation	-6
Operating Income	33
Interest Expense	-4
Profit Before taxes	29
Taxes	-12
Net Income	17




Ratios to Compute	2015	Better or Worse	2015 Industry Average (%)
Mayberry
Current			2.86
Quick	2.31
Debt-Equity	0.51
Times interest period	12.36
Average Collection period	1.06
Inventory Turnover	95.71
Fixed-asset turnover	16.15
Operating profit margin	0.036
Net profit margin	0.019
Book return on assets	0.192
Book return on equity	0.271

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