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Balance Sheet and Income Statement Analysis

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The balance sheet and income statement shown below are for Kryloc Inc. You will find that the firm has no amortization charges. It also does not lease any assets and none of its debt must be retired during the next 5 years. The notes payable will be rolled over.

Balance Sheet (Millions of $)
Assets 2010
Cash and securities $ 2,500
Accounts receivable 11,500
Inventories 16,000
Total current assets $30,000
Net plant and equipment $20,000
Total assets $50,000

Liabilities and Equity
Accounts payable $9,500
Notes payable 7,000
Accruals 5,500
Total current liabilities $22,000
Long-term bonds $15,000
Total debt $37,000
Common stock $2,000
Retained earnings 11,000
Total common equity $13,000
Total liabilities and equity $50,000

Income Statement (Millions of $) 2010
Net sales $87,500
Operating costs except depreciation 81,813
Depreciation 1,531
Earnings bef interest and taxes (EBIT) $4,156
Less interest 1,375
Earnings before taxes (EBT) $2,781
Taxes 973
Net income $1,808

Other data:
Shares outstanding (millions) 500.00
Common dividends $632.73
Int rate on notes payable & L-T bonds 6.25%
Federal plus state income tax rate 35%
Year-end stock price $43.39

Assignment Questions

i. What is the firm's current ratio?
ii. What is the firm's quick ratio?
iii. What is the firm's "days sales outstanding" (DSO)? Assume a 365-day year for this calculation.
iv. What is the firm's total assets turnover?
v. What is the firm's inventory turnover ratio?
vi. What is the firm's TIE?
vii. What is the firm's debt/assets ratio?
viii. What is the firm's ROA?
ix. What is the firm's ROE?
x. What is the firm's dividends per share?
xi. What is the firm's EPS?
xii. What is the firm's P/E ratio?
xiii. What is the firm's book value per share?

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The balance sheet and income statement shown below are for Kryloc Inc. You will find that the firm has no amortization charges. It also does not lease any assets and none of its debt must be retired during the next 5 years. The notes payable will be rolled over.

Balance Sheet (Millions of $)
Assets 2010
Cash and securities $ 2,500
Accounts receivable 11,500
Inventories 16,000
Total current assets $30,000
Net plant and equipment $20,000
Total assets $50,000

Liabilities and Equity
Accounts payable $9,500
Notes payable 7,000 ...

Solution Summary

The balance sheet and income statement analysis are examined. Notes with payable roll over are determined.

$2.19
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Balance Sheet, Income Statement and Financial Ratio Analysis: Caribou Coffee and Fazer Group

Review of the income statement and balance sheet and compute the ratios for Caribou Coffee and Fazer Group.

Financial Rations:
Profitability ratios:
Gross profit margin
Net profit margin
Return on stockholders' equity
Liquidity ratios:
Current ratio
Quick ratio
inventory turnover
Leverage ratios:
Debt-to-assets
Debt-to-equity
Times-covered ratio

Balance Sheet:
What components of stockholders' equity do each of the companies disclose?
Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain?
Do any of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares?

Income Statement:
What are the basic and diluted earnings per share for each company?
Have the companies reported any discontinued operations for the last year?
Do the companies disclose any stock compensation plans? If so, are they reporting such plans under the fair value or intrinsic value methods? What was the value of compensation expense measured for any outstanding stock option plans?

What type of information do you find in footnotes to the financial statements?
Do you find the balance sheet, income statement or other measures such as ratios the most informative?
Comment of the advantages and disadvantages of using ratios for analysis.

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