Purchase Solution

Calculating ratios for Taylor Tool Company

Not what you're looking for?

Ask Custom Question

P15-2 The comparative statement of Taylor Tool Company are presented below

Taylor Tool Company
Income Statement
For the Year Ended December 31
2006 2005
Net Sales $ 1,818,500 $1,750,500
Cost of Goods Sold $1,011,500 $996,000
Gross Profit $807,000 $754,500
Selling and administrative expense $506,000 $479,000
Income from operations $301,000 $275,500
Other expenses and losses
Interest expense $18,000 $14,000
Income before taxes 283,000 $261,500
Income tax $84,000 $77,000
Net income $199,000 $184,500

Taylor Tool Company
Balance Sheet
31-Dec
Assets 2006 2005
Current assets
Cash $60,100 $64,200
Short-term investments $69,000 $50,000
Accounts receivables(net) $107,800 $102,800
Inventory $133,000 $115,500
Total current assets $369,900 $332,500
Plant assets (net) $600,300 $520,300
Total Assets $970,200 $852,800
Liability ans stockholders' Equity
Current Liability
Accounts Payables $160,000 $145,400
Income Tax Payable $43,500 $42,000
Total Current Liability $203,500 $187,400
Bond Payable $200,000 $200,000
Total Liability $403,500 $387,400
Stockholders' equity
Common Stock ($5 par) $280,000 $300,000
Retained earnings $286,700 $165,400
Total Stockholders' equity $566,700 $465,400
Total Liabilities and stockholders' equity $970,200 $852,800

All sales were on account. The allowance for doubtful account was $3,200 on December 31, 2006, and $3,000 on
December 31, 2005.

Instructions
Compute the following ratios for 2006. (Weighted average common shares in 2006 were 57,000.)
a) Earnings per share (f) Receivables turnover.
b) Return on common stockholder's equity (g) Inventory turnover.
c) Return on assets. (h) Times interest earned.
d) Current. (i) Asset turnover.
e) Acid-test (j) Debt to total asets.

I have already submitted this problem, but I am still not sure is what I did is correct. I would like to compare my answers.

Purchase this Solution

Solution Summary

The solution explains how to calculate the various ratios given the comparative balance sheets using the example of Taylor Tool Company

Solution Preview

Please see the attached file

a) Earnings per share = Net Income/Weighted Average common shares) $3.49
b) Return on common stockholder's equity = Net Income/Average ...

Purchase this Solution


Free BrainMass Quizzes
Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

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.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.