Explore BrainMass
Share

# Financial statement analysis for James Company

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

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

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

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 ( )

( )

#### Solution Summary

The solution examines financial statement analysis for James Company. The comparative balance sheets are analyzed.

\$2.19
Similar Posting

## Analysis of Financial Statements and Preparation of Income Statements

1. Prepare an income statement for the month of February. Compute the ratio of total operating expense to total revenue and operating income to total revenue.
2. Compute the per unit cost of repairing one windshield.
3. The manager of The Windshield People must keep unit operating cost below \$50 per windshield in order to get his bonus. Did he meet the goal?
4. What kind of system could The Windshield People use to integrate all its data?
1. Which of these suggested strategies are inconsistent with IMA standards?
2. What should Wallace do if Cauvet insists that she follow all of these suggestions?
1. Compute the following ratios for both companies for the current year, and decide which company's stock better fits your investment strategy.
" a. Acid-test ratio
b. Inventory turnover
c. Days' sales in receivables
d. Debt ratio
e. Earnings per share of common stock
f. Price/earnings ratio
g. Dividend payout"

View Full Posting Details