Analysis of financial statement and computation of ratios
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Calculation of financial statement ratios:
Please look at the selected year-end financial statements of McCord Corporation.
Note: All sales are on credit, selected balance sheet amounts for December 31, 2010 were inventory at $32,400, total assets at $182,400, common stock at $90,000, and retained earnings at $31,300.
McCORD CORPORATION
(Income Statement)
For Year Ended December 31, 2011
Sales . . . . . . . . . . . . . . . . . . . $348,600
Cost of goods sold . . . . . . . . 229,150
Gross profit . . . . . . . . . . . . . 119,450
Operating expenses . . . . . . . . 52,500
Interest expense . . . . . . . . . . 3,100
Income before taxes . . . . . . . 63,850
Income taxes . . . . . . . . . . . . . 15,800
Net income . . . . . . . . . . . . . . $ 48,050
(Balance Sheet)
December 31, 2011
Assets Liabilities and Equity
Cash . . . . . . . . . . . . . . . . . . . . . . $ 9,000 Accounts payable . . . . . . . . . . . . . . . . . . $ 16,500
Short-term investments . . . . . . . . . 7,400 Accrued wages payable . . . . . . . . . . . . . . 2,200
Accounts receivable, net . . . . . . . . 28,200 Income taxes payable . . . . . . . . . . . . . . . . 2,300
Notes receivable (trade)* . . . . . . . . 3,500 Long-term note payable, secured
Merchandise inventory . . . . . . . . . . 31,150 by mortgage on plant assets . . . . . . . . . 62,400
Prepaid expenses . . . . . . . . . . . . . . 1,650 Common stock, $1 par value . . . . . . . . . . 90,000
Plant assets, net . . . . . . . . . . . . . . . 152,300 Retained earnings . . . . . . . . . . . . . . . . . . 59,800
Total assets . . . . . . . . . . . . . . . . . . $233,200 Total liabilities and equity . . . . . . . . . . . . . $233,200
TASK:
Please compute the following:
(1) Current ratio
(2) Acid-test ratio
(3) Day's sales uncollected
(4) Inventory Turnover
(5) Day's sales in inventory
(6) Debt to Equity ratio
(7) Times Interest Earned
(8) Profit Margin ratio
(9) Total Asset Turnover
(10) Return on Total Assets
(11) Return on Common Stockholders' Equity
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Solution Summary
The solution provides an analysis of financial statements and computation of ratios.
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Analysis of financial statmements
Please look at the attached file for the Excel formulas calculating the following ratios in accordance with the
Current ratio = Current Assets/Current Liabilities = ...
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