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    Financial Ratio Analysis for Davis, Inc.

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    See Davis Inc. document attached.

    The financial statements of Davis Inc. appear below:
    DAVIS, INC.
    Comparative Balance Sheet
    December 31,
    ---------------------------------------------------
    Assets 2012 2011
    Cash ........................................................................................................................ $50,000 $45,000
    Short-term investments ......................................................................................... 35,000 55,000
    Accounts receivable (net) ....................................................................................... 40,000 30,000
    Inventory ................................................................................................................ 60,000 80,000
    Property, plant and equipment (net) ..................................................................... 275,000 290,000
    Total assets ..................................................................................................... $460,000 500,000

    Liabilities and stockholders' equity
    Accounts payable ................................................................................................... $20,000 $35,000
    Short-term notes payable ...................................................................................... 35,000 70,000
    Bonds payable ........................................................................................................ 120,000 140,000
    Common stock ....................................................................................................... 150,000 150,000
    Retained earnings .................................................................................................. 135,000 105,000
    Total liabilities and stockholders' equity ......................................................... $460,000 $500,000

    DAVIS, INC.
    Income Statement
    For the Year Ended December 31, 2012
    Net sales ................................................................................................................. $500,000
    Cost of goods sold .................................................................................................. 280,000
    Gross profit............................................................................................................. 220,000
    Expenses
    Operating expenses ........................................................................................ $122,000
    Interest expense ............................................................................................. 13,000
    Total expenses ......................................................................................... 135,000
    Income before income taxes .................................................................................. 85,000
    Income tax expense ............................................................................................... 25,000
    Net income ............................................................................................................. $ 60,000

    Additional information:
    a. Cash dividends of $30,000 were declared and paid in 2012.
    b. Weighted-average number of shares of common stock outstanding during 2012 was 25,000 shares.
    c. Market value of common stock on December 31, 2012, was $20 per share.

    Instructions
    Using the financial statements and additional information, compute the following ratios for Davis, Inc. for 2011. You must show supporting computations to receive full credit.

    1. Current ratio
    2. Return on common stockholders' equity
    3. Price-earnings ratio
    4. Acid-test ratio
    5. Receivables turnover
    6. Times interest earned
    7. Days in inventory
    8. Return on assets

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    https://brainmass.com/business/financial-statements/financial-ratio-analysis-davis-395490

    Attachments

    Solution Summary

    The attached MS Excel spreadsheet contains a detailed financial ratio analysis for Davis, Incorporated based on data from the company's income statement and balance sheet.

    $2.19

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