The Balance Sheet and Income Statement Data for Galaxy Computer Co. is given below BALANCE SHEET Assets 2001 2000 Cash 7,282 9,000 Short term investment 0 48,600 Acc. Receivable 632,160 351,200 Inventories 1,287,360 715,200 Total current assets 1,926,802 1,124,000 Fixed Assets Plant & Equipment 1,202,950 491,000 Less: Acc dep 263,160 146,200 939,790 344,800 Total assets 2,866,592 1,468,800 Liabilities & Equities Current liability A/c Payable 524,160 145,600 Notes payable 720,000 200,000 Accruals 489,600 136,000 total Current liability 1,733,760 481,600 Long-term debt 1,000,000 323,432 Common Stock 460,000 460,000 Retained Earning -327,168 203,768 1,132,832 987,200 Total equities 2,866,592 1,468,800 Income Statement Sales 5,834,400 3,432,000 Cost of Goods Sold 5,728,000 2,864,000 Other expense 680,000 340,000 dep 116,960 18,900 EBIT/ LOSS -690,560 209,100 Interest expense 176,000 62,500 EBT/ LOSS -866,560 146,600 tax -346624 58640 net income/loss -519,936 87,960 Required: Part 1. Compute at least two ratios in each area (numbered 1 to 2 below) for both years. (Note: Do not take average of two years to calculate any formula, work on individual year figure for all calculation. For example, do not take average inventory or average receivable. Leverage Efficiency ratio/Asset Activity Part 2. Based on your calculations in part a, interpret and give your comments about the company’s liquidity, profitability, and solvency.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.4.13P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...

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The Balance Sheet and Income Statement Data for Galaxy Computer Co. is given below

BALANCE SHEET
Assets	2001	2000
Cash	7,282	9,000
Short term investment	0	48,600
Acc. Receivable	632,160	351,200
Inventories	1,287,360	715,200
Total current assets	1,926,802	1,124,000

Fixed Assets
Plant & Equipment	1,202,950	491,000
Less: Acc dep	263,160	146,200
	939,790	344,800
Total assets	2,866,592	1,468,800

Liabilities & Equities
Current liability
A/c Payable	524,160	145,600
Notes payable	720,000	200,000
Accruals	489,600	136,000
total Current liability	1,733,760	481,600

Long-term debt	1,000,000	323,432
Common Stock	460,000	460,000
Retained Earning	-327,168	203,768
	1,132,832	987,200
Total equities	2,866,592	1,468,800

Income Statement
Sales	5,834,400	3,432,000
Cost of Goods Sold	5,728,000	2,864,000
Other expense	680,000	340,000
dep	116,960	18,900
EBIT/ LOSS	-690,560	209,100
Interest expense	176,000	62,500
EBT/ LOSS	-866,560	146,600
tax	-346624	58640
net income/loss	-519,936	87,960

Required:

Part 1. Compute at least two ratios in each area (numbered 1 to 2 below) for both years. (Note: Do not take average of two years to calculate any formula, work on individual year figure for all calculation. For example, do not take average inventory or average receivable.

Leverage
Efficiency ratio/Asset Activity

Part 2. Based on your calculations in part a, interpret and give your comments about the company’s liquidity, profitability, and solvency.

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