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    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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    https://brainmass.com/business/financial-statements/financial-statement-analysis-241529

    Solution Summary

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

    $2.19

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