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Use the preceding financial statements to complete the following table. Assume the industry averages given in the table are applicable for both 2011 and 2012. Ratio Industry average Actual 2011 Actual 2012 Current ratio 1.80 1.84 Quick ratio 0.70 0.78 Inventory turmover 2.50 2.59 ||

Use the preceding financial statements to complete the following table. Assume the industry averages given in the table are applicable for both 2011 and 2012. Ratio Industry average Actual 2011 Actual 2012 Current ratio 1.80 1.84 Quick ratio 0.70 0.78 Inventory turmover 2.50 2.59 ||

Financial & Managerial Accounting
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 15.17EX: Profitability ratios The following selected data were taken from the financial statements of...
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A. Use the preceding financial statements to complete the following table. Assume that the industry averages given in the table are applicable for both 2002 and 2003. Thank you

a. Use the preceding financial statements to complete the following table. Assume the industry averages given in the table are applicable for both 2011 and 2012. Ratio Industry average Actual 2011 Actual 2012 Current ratio 1.80 1.84 Quick ratio 0.70 0.78 Inventory turnover" 2.50 2.59 37.5 days Average collection period" Debt ratio 36.5 days 65% 67% Times interest earned ratio 3.8 4.0 Gross profit margin Net profit margin 38% 40% 3.5% 3.6% Return on total assets 4.0% 4.0% Return on common equity 9.5% 8.0% Market/book ratio 1.1 1,2 "Based on a 365-day year and on end-of-year figures.
Transcribed Image Text:a. Use the preceding financial statements to complete the following table. Assume the industry averages given in the table are applicable for both 2011 and 2012. Ratio Industry average Actual 2011 Actual 2012 Current ratio 1.80 1.84 Quick ratio 0.70 0.78 Inventory turnover" 2.50 2.59 37.5 days Average collection period" Debt ratio 36.5 days 65% 67% Times interest earned ratio 3.8 4.0 Gross profit margin Net profit margin 38% 40% 3.5% 3.6% Return on total assets 4.0% 4.0% Return on common equity 9.5% 8.0% Market/book ratio 1.1 1,2 "Based on a 365-day year and on end-of-year figures.
Financial Statements and Ratio Analysis 107 CHAPTER 3 LG 6 P3-23 Financial statement analysis The financial statements of Zach Industries for the year ended December 31, 2012, follow. Zach Industries Balance Sheet December 31, 2012 Assets Cash 00 Marketable securities 1,000 Zach Industries Income Statement for the Year Ended December 31, 2012 Accounts receivable 25,000 Inventories 45,500 $ 72,000 $ 26,000 Sales revenue S160,000 Total current assets Land Less: Cost of goods sold Gross profits 106,000 S 54.000 Baildings and equipment Less: Accumulated depreciation 90,000 Less: Operating espenses Selling expense General and administrative expenses 38,000 S 78,000 $150,000 Net fixed assets $ 16,000 10,000 Total assets Lease expense 1,000 Liabilities and Stockholders' Equity Accounts payable 10,000 $ 37,000 $ 17,000 $ 22,000 Depreciation expense Total operating expense Notes payable 47,000 $ 69,000 Total current liabilities Operating profits Less: Interest expense Long-term debt Common stock Retained earnings Total liabilities and stockholders' equity 22,950 6,100 S 10,900 4,360 $ 6,540 31,500 Net profits before taxes 26,550 $150.000 Less: Taxes Net profits after taxes The firm's 00 outstanding shares of common sock dlosed 2012 ata price of $25 per share.
Transcribed Image Text:Financial Statements and Ratio Analysis 107 CHAPTER 3 LG 6 P3-23 Financial statement analysis The financial statements of Zach Industries for the year ended December 31, 2012, follow. Zach Industries Balance Sheet December 31, 2012 Assets Cash 00 Marketable securities 1,000 Zach Industries Income Statement for the Year Ended December 31, 2012 Accounts receivable 25,000 Inventories 45,500 $ 72,000 $ 26,000 Sales revenue S160,000 Total current assets Land Less: Cost of goods sold Gross profits 106,000 S 54.000 Baildings and equipment Less: Accumulated depreciation 90,000 Less: Operating espenses Selling expense General and administrative expenses 38,000 S 78,000 $150,000 Net fixed assets $ 16,000 10,000 Total assets Lease expense 1,000 Liabilities and Stockholders' Equity Accounts payable 10,000 $ 37,000 $ 17,000 $ 22,000 Depreciation expense Total operating expense Notes payable 47,000 $ 69,000 Total current liabilities Operating profits Less: Interest expense Long-term debt Common stock Retained earnings Total liabilities and stockholders' equity 22,950 6,100 S 10,900 4,360 $ 6,540 31,500 Net profits before taxes 26,550 $150.000 Less: Taxes Net profits after taxes The firm's 00 outstanding shares of common sock dlosed 2012 ata price of $25 per share.
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