Financial statement analysis for James Company
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The condensed financial statements of James Company for the years 2007-2008 are presented below:
James Company
Comparative Balance Sheets
As of December 31, 2008 and 2007
2008 2007
Cash $ 420,000 $ 120,000
Receivables (net) 460,000 300,000
Inventories 380,000 340,000
Plant and equipment 1,700,000 1,112,000
Accumulated depreciation (260,000) (192,000)
$2,700,000 $1,680,000
Accounts payable $ 240,000 $ 160,000
Dividends payable -0- 40,000
Bonds payable 400,000 -0-
Common stock ($10 par) 1,520,000 1,200,000
Retained earnings 540,000 280,000
$2,700,000 $1,680,000
Additional data:
Market value of stock at 12/31/08 is $80 per share.
James sold 32,000 shares of common stock at par on July 1, 2008.
James Company
Condensed Income Statement
For the Year Ended December 31, 2008
Sales $2,400,000
Cost of goods sold 1,600,000
Gross profit 800,000
Administrative and selling expense 500,000
Net income $ 300,000
Instructions
Compute the following financial ratios by placing the proper amounts in the parentheses provided for numerators and denominators. Fill in the numerator and denominator only; do not compute the ratios.
a. Current ratio at 12/31/08 ( )
( )
b. Acid test ratio at 12/31/08 ( )
( )
c. Receivables turnover in 2008 ( )
( )
d. Inventory turnover in 2008 ( )
( )
e. Profit margin on sales in 2008 ( )
( )
f. Earnings per share in 2008 ( )
( )
g. Rate of return on common stock equity in 2008 ( )
( )
h. Price earnings ratio at 12/31/08 ( )
( )
i. Debt to total assets at 12/31/08 ( )
( )
j. Book value per share at 12/31/08 ( )
( )
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Solution Summary
The solution examines financial statement analysis for James Company. The comparative balance sheets are analyzed.
Education
- MBA, Indian Institute of Finance
- Bsc, Madras University
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