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    Liquidity of Blackwood Company

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    Determine the liquidity position of Blackwood Company with the provided financial information.

    1.      Determine the liquidity position of Blackwood Company with the provided financial data

    Blackwood Company
    Balance Sheets as of December 31,
    (all numbers in thousands of US dollars)

    2007 2006 2005 2,004
    Current assets:
    Cash $464 $1,012 $1,185
    Marketable securities 1,548 394 299
    Accounts receivable $15,098 $13,688 $8,875 $9,215
    Less: Allowance for Doubtful Accounts 385 381 259 277
    Accounts receivable, net 14,713 13,307 8,616
    Inventory 7,425 8,585 7,699
    Prepaid expenses 725 866 724
    Total current assets: 24,875 24,164 18,523
    Other assets:
    Plant and equipment 106,422 105,642 104,020 104,580
    Less: Accumulated depreciation 47,604 49,761 47,949 45,790
    Plant and equipment, net 58,818 55,881 56,071
    Investments 9,476 9,433 10,474
    Other assets 5,842 5,966 5,364
    Total long-term assets 74,136 71,280 71,909
    Total assets $99,011 $95,444 $90,432

    Current liabilities:
    Accounts payable 14,090 12,309 11,520
    Accrued payables 903 887 588
    Short-term debt 2,500 1,000 -
    Total current liabilities 17,493 14,196 12,108

    Long-term notes payable 40,000 30,000 50,000

    Total liabilities 57,493 44,196 62,108

    Stockholders' equity:
    Common Stock (at par value) 52 52 52
    Additional paid-in capital 1,116 1,116 1,116
    Retained earnings 64,434 61,116 57,777
    Less: Treasury stock (24,084) (11,036) (30,621)
    Total stockholders' equity 41,518 51,248 28,324
    Total liabilities and stockholders' equity $99,011 $95,444 $90,432

    Income Statements For the Years Ended December 31,
    (all numbers in thousands of US dollars)
    2,007 2,006 2,005 2,004

    Sales $118,421 $110,994 $101,863 $106,456
    Less: COGS 78,539 73,824 69,143 71,314
    Gross margin 39,882 37,170 32,720 35,142
    Less: Selling, general, and
    administrative expenses 23,674 22,749 21,396 22,898
    Operating income 16,208 14,421 11,324 12,244
    Less: interest expense 2,791 1,757 3,068 2,833
    Net income before income taxes 13,417 12,664 8,256 9,411
    Less: income taxes 4,873 4,566 3,076 3,416
    Net income $8,544 $8,098 $5,180 $5,995

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    https://brainmass.com/business/finance/liquidity-blackwood-company-407504

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    SOLUTION This solution is FREE courtesy of BrainMass!

    Interpretation

    Current ratio explains the short term liquidity position of the organization. Here Blackwood's liquidity have improved as its current ratio
    has improved from 1.37 in 2004 to 1.42 in 2007. But it still fall short of ideal ratio of 2:1

    Quick ratio explains the very short term liquidity position of the organization. Here Blackwood's liquidity have improved as its quick ratio
    has improved from 0.773 in 2004 to 0.956 in 2007. Its near to the ideal ratio of 1:1

    Working capital has improved from $5000000 in 2004 to $7382000 in 2007.

    Thus, overall the liquidity situation of the company is satisfactory.

    Please see the attached excel document

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 9:43 pm ad1c9bdddf>
    https://brainmass.com/business/finance/liquidity-blackwood-company-407504

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