Alley Company: compute various financial ratios
Not what you're looking for?
Alley Company
Comparative balance sheet December 31, 2009
Assets 2009 2008
Cash $35,000 $40,000
Marketable securities 15,000 60,000
Accounts receivable (net) 40,000 30,000
Inventory 50,000 70,000
Property, plant andequipment (net) 260,000 300,000
Total assets $400,000 $500,000
Liabilities and stockholders equity
Accounts payable $20,000 $30,00
Short term notes payable 30,000 90,000
Bnds payable 90,000 160,000
Common stock 150,000 150,000
Retained earnings 110,000 70,000
Total liabilities and stockholders' equity $400,00 $500,000
--------------------------------------------------------------------------
Alley Company
Income statement
for the year ended December 31, 2009
Net sales $400,000
Cost of goods sold 240,000
Gross profit 160,000
Expenses
Interest expense $18,000
Selling expenses 28,000
Administrative expenses 24,000
Total expenses 70,000
Income before income taxes 90,000
Income tax expense 27,000
Net income $63,000
--------------------------------------------------------------------
Additional information:
a) cash dividends of $23,000 were declared and paid in 2009
b) weighted average number of shares of common stock outstanding during 2009 was 30,000 shares
c) market value of common stock on December 31, 2009, was $21 per share
------------------------------------------------------------------
QUESTIONS:
Using the financial statement and additional information, compute at least five of the following ratios for Alley Company for 2009. Show all computations.
1) Current ratio_________
2) Return on common stockholders equity_________
3) Price earnings ratio_____________
4) Acid-test ratio_________________
5) Number of days sales in accounts receivable______________
6) Times interest earned________________
7) Return on sales_____________
8)Return on assest____________________
Purchase this Solution
Solution Summary
The expert computes various financial ratios for Alley Company.
Solution Preview
ANSWERS
Please see attached file for answers.
Formula Answer
Cash + marketable securities + accounts receivable + inventory 35000+15000+40000+50000 2.8
Accounts payable short term ...
Purchase this Solution
Free BrainMass Quizzes
Motivation
This tests some key elements of major motivation theories.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Basics of corporate finance
These questions will test you on your knowledge of finance.