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Problem 17-01 Student Name: Instructions: Use the following financial statements of McCoy Corporation to complete these requirements: Prepare...

This question was answered on Jan 14, 2013. View the Answer
Analysis of Financial Statements! Accounting Homework Help!
Problem 17-01 Student Name: 1. Prepare comparative income statements showing the percent increase or decrease for year XXX3 in comparison to year XXX2. 2. Prepare common-size comparative balance sheets for years XXX3 and XXX2. 3. Compute the 21 ratios as of December 31, XXX3, or for the year ended December 31, XXX3. (Be sure to review the building block category for each ratio for financial statement analysis.) Additional Data Needed for Computing Ratios: Market price of common, December 31, XXX3 = $21.00 Issued 5,000 common shares on July 1, XXX3, at $29.80 per share. Dividends declared and paid on common shares = $1 per share on 80,000 shares Dividends declared and paid on preferred shares = $1 per share on 10,000 shares (horizontal analysis) for year XXX3 in comparison to year XXX2. for the year ended December 31, XXX3. McCOY CORPORATION McCOY CORPORATION Comparative Income Statements Ratios for XXX3 For Years Ended December 31, XXX3 and XXX2 Liquidity and Efficiency December 31 Increase (Decrease) in XXX3 XXX3 XXX2 Amount Percent (1) Working capital Sales $2,486,000 $2,075,000 Cost of goods sold 1,523,000 1,222,000 (2) Current ratio to 1 Gross profit $963,000 $853,000 Operating expenses (3) Acid-test ratio to 1 Advertising expense 145,000 100,000 Sales salaries expense 240,000 280,000 (4) Accounts receivable turnover to 1 Office salaries expense 165,000 200,000 Insurance expense 100,000 45,000 (5) Days' sales uncol ected days Supplies expense 26,000 35,000 Depreciation expense 85,000 75,000 (6) Inventory turnover times Miscel aneous expenses 17,000 15,000 Total operating expenses 778,000 750,000 (7) Days' sales in inventory days Operating income 185,000 103,000 Interest expense 44,000 46,000 8) Total asset turnover to 1 Income before taxes $141,000 $57,000 Income taxes 47,000 19,000 Solvency Net income $94,000 $38,000 (9) Debt ratio (10) Equity ratio McCOY CORPORATION (11) Debt-to-equity ratio Comparative Balance Sheets December 31, XXX3 and XXX2 (12) Times interest earned times December 31 Common-Size Percents XXX3 XXX2 XXX3 XXX2 (13) Pledged assets to secured liabilities Note: This ratio is covered in the lecture notes. Assets For pledged assets to secured liabilities, assume pledged assets are plant assets Current assets Profitability and secured liabilities are long-term liabilities. Cash $79,000 $42,000 Short-term investments 65,000 96,000 (14) Gross margin Accounts receivable, net 100,000 80,000 Notes receivable (trade) 20,000 20,000 (15) Profit margin Merchandise inventory 200,000 190,000 Prepaid expenses 50,000 75,000 (16) Return on total assets Total current assets 514,000 503,000 Plant assets (17) Return on common stockholders' equity Store equipment, net 400,000 350,000 Office equipment, net 45,000 50,000 (18) Book value per common share Buildings, net 625,000 675,000 Land 100,000 100,000 (19) Basic earnings per share Total plant assets 1,170,000 1,175,000 Note: Weighted average shares is computed as fol ows: Total assets $1,684,000 1,678,000 Market Prospects Company had 75,000 shares of common outstanding at end of Year 2 ($150,000 /$2 par value). Company had 80,000 shares of common outstanding at end of Year 3 because 5,000 additional shares were issued on July 1 ($160,000/$2 par value). Liabilities and Equity (20) Price-earnings ratio 75,000 x 6 months (January 1 - June 30)   =    450,000 Liabilities Current liabilities (21) Dividend yield Total / 12 months                                        =    930,000/12 = 77,500 Accounts payable $144,000 $170,000 Accrued wages payable $20,000 20,000 Short-term notes payable 75,000 90,000 Income taxes payable 26,000 12,000 Total current liabilities 265,000 292,000 Long-term liabilities Long-term note payable, secured by mortgage on plant assets 300,000 420,000 Total long-term liabilities 300,000 420,000 Total liabilities 565,000 712,000 Stockholders' Equity Preferred stock, 10% ($1), $10 par value 100,000 100,000 Common stock, $2 par value 160,000 150,000 Paid-in capital, common 289,000 150,000 Retained earnings 570,000 566,000 Total stockholders' equity 1,119,000 966,000 Total liabilities and equity $1,684,000 $1,678,000 Instructions: Use the fol owing financial statements of McCoy Corporation to complete these requirements: Part 1. Prepare comparative income statements showing the percent increase or decrease Part 3. Compute the 21 ratios as of December 31, XXX3, or Part 2. Prepare common-size comparative balance sheets (vertical analysis) for years XXX3 and XXX2. For  basic earnings per share , you need weighted average shares. 80,000 x 6 months (July 1 - December 31) =    480,000
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Problem 17-01 Student Name: Instructions: Use the following financial statements of McCoy Corporation to complete these requirements:
1. Prepare comparative income statements showing the percent...

This question was asked on Jan 14, 2013 and answered on Jan 14, 2013.

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