Chapter 3b

Chapter 3b - Chapter 3b 1. (Balance Sheet Analysis )...

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Chapter 3b 1. ( Balance Sheet Analysis ) Complete the following balance sheet using the following information provided and assuming 360 day per year: Ratios Return on Equity: 2.5 Average Collectio n Period: 30 Return on Fixed Assets: 1.3 Gross Margin: 0.33 Inventory Turnover: 2.5 Current Ratio 1.25 Balance Sheet Cash Accounts Receivable Inventory Current Assets Net Fixed Assets Total Assets Accounts Payable 2000 Long Term Debt Total Liabilities Common Equity Income Statement Sales 6000 COGS 3750 Gross Profit 2250 Operating Expense 750 Operating Income 1500 Interest Expense 350 Earnings Before Tax 1150 Income Tax (35%) 460 Net Income 690 2. ( Computing Ratios ) Solve the following ratios with the given Income Statement and Balance Sheet: Balance Sheet Cash 435 Accounts Receivable 578 Ratios Inventory 901 Return on Assets Current Assets 1914 Average Collection Period
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Net Fixed Assets 8789 Acid-test ratio Total Assets 10703 Debt Ratio Operating Profit Margin Return on Equity Times Interest Earned Accounts Payable 789 Inventory Turnover Long Term Debt 1111 Total Liabilities 1900 Common Equity 8803 Income Statement Sales 67500 COGS 7890 Gross Profit 59610 Operating Expense 333 Operating Income 59277 Interest Expense 652 Earnings Before Tax 58625 Income Tax (35%) 23450 Net Income 35175 3. Compare the firm’s ratios you calculated to the industry average ratios to discover where the firm needs improvement: Industry Average Ratios Return on Assets 4.3 Average Collection Period 30.2 Acid-test ratio 70% Debt Ratio 35% Operating Profit Margin 75% Return on Equity 4.37 Times Interest Earned 42.5 Inventory Turnover 11.7
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Use the following to answer the remaining questions: Jubilee, Inc. 2007 Income Statement
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Chapter 3b - Chapter 3b 1. (Balance Sheet Analysis )...

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