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Financial Ratios - Balance Sheet and Income Analysis

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Accounts Payable..............$ 1,800
Accounts Receivable.......... 5,475
Building.............................40,000
Cash........................... 1,125
Capital Stock................... 20,000
Inventory............................ 3,400
Land............................ 10,000
Long-Term Notes Payable.... 27,000
Market Value of Equity........ 90,000
Net Income.................... 7,000
Retained Earnings (ending).... 5,000
Sales............................. 100,000
Short-Term Notes Payable.......2,300
Stockholders' Equity........... 25,000
Unearned Revenue..................3,900

Use the information in the table above to compute the following ratios:
a. Debt Ratio
b. Current Ratio
c. Return on Sales
d. Asset Turnover
e. Return on Equity
f. Price-Earnings Ratio

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https://brainmass.com/business/financial-statements/financial-ratios-balance-sheet-and-income-analysis-173232

Solution Preview

The first step is to categorize the data in the table into a balance sheet and statement of income.
Enough data is provided to complete a balance sheet, which is given in the attachment (choose word .doc format or .pdf). Notice that the Total Assets ($60,000) equals the Total Debt + Shareholder's Equity ($60,000) as they must in a balance sheet.
The balance sheet items must be subcategorized into short term and ...

Solution Summary

The provided data is reformatted into a balance sheet and income statement. Using the reformatted data, the required ratios are calculated. Solution is provided in both Word .doc and pdf formats.

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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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