| Question Detail: Week Five Exercise Assignment Don't use plagiarized sources. Get Your Custom Essay on acc 205 week 5 exercise assignment solutions brand new 100 accuarte answer solved by 497970 For $10/Page 0nly Financial Ratios - Liquidity ratios.Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
| Edison | Stagg | Thornton | | Cash | $6,000 | $5,000 | $4,000 | | Short-term investments | 3,000 | 2,500 | 2,000 | | Accounts receivable | 2,000 | 2,500 | 3,000 | | Inventory | 1,000 | 2,500 | 4,000 | | Prepaid expenses | 800 | 800 | 800 | | Accounts payable | 200 | 200 | 200 | | Notes payable: short-term | 3,100 | 3,100 | 3,100 | | Accrued payables | 300 | 300 | 300 | | Long-term liabilities | 3,800 | 3,800 | 3,800 | - Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
- Computation and evaluation of activity ratios.The following data relate to Alaska Products, Inc:
| | 20X5 | 20X4 | | Net credit sales | $832,000 | $760,000 | | Cost of goods sold | 530,000 | 400,000 | | Cash, Dec. 31 | 125,000 | 110,000 | | Average Accounts receivable | 205,000 | 156,000 | | Average Inventory | 70,000 | 50,000 | | Accounts payable, Dec. 31 | 115,000 | 108,000 | | Instructions - Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.
| 3. Profitability ratios, trading on the equity.Digital Relay has both preferred and common stock outstanding. The com pany reported the following information for 20X7: | Net sales | $1,750,000 | | Interest expense | 120,000 | | Income tax expense | 80,000 | | Preferred dividends | 25,000 | | Net income | 130,000 | | Average assets | 1,200,000 | | Average common stockholders’ equity | 500,000 | - Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places.
- Does the firm have positive or negative financial leverage? Briefly ex plain.
- Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
| | 20X2 | 20X1 | | Current Assets | $86,000 | $80,000 | | Property, Plant, and Equipment (net) | 99,000 | 90,000 | | Intangibles | 25,000 | 50,000 | | Current Liabilities | 40,800 | 48,000 | | Long-Term Liabilities | 153,000 | 160,000 | | Stockholders Equity | 16,200 | 12,000 | | Net Sales | 500,000 | 500,000 | | Cost of Goods Sold | 322,500 | 350,000 | | Operating Expenses | 93,500 | 85,000 | - Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.
| 5.Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow. | 20X2 | 20X1 | | Current Assets | $86,000 | $80,000 | | Property, Plant, and Equipment (net) | 99,000 | 80,000 | | Intangibles | 25,000 | 50,000 | | Current Liabilities | 40,800 | 48,000 | | Long-Term Liabilities | 153,000 | 150,000 | | Stockholders Equity | 16,200 | 12,000 | | Net Sales | 500,000 | 500,000 | | Cost of Goods Sold | 322,500 | 350,000 | | Operating Expenses | 93,500 | 85,000 | - Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.
| 6. Ratio computation. The financial statements of the Lone Pine Company follow. | | LONE PINE COMPANY | | Comparative Balance Sheets | | December 31, 20X2 and 20X1 ($000 Omitted) | | 20X2 | 20X1 | | Assets | | Current Assets | | Cash and Short-Term Investments | $400 | $600 | | Accounts Receivable (net) | 3,000 | 2,400 | | Inventories | 3,000 | 2,300 | | Total Current Assets | $6,400 | $5,300 | | Property, Plant, and Equipment | | Land | $1,700 | $500 | | Buildings and Equipment (net) | 1,500 | 1,000 | | Total Property, Plant, and Equipment | $3,200 | $1,500 | | Total Assets | $9,600 | $6,800 | | Liabilities and Stockholders Equity | | Current Liabilities | | Accounts Payable | $2,800 | $1,700 | | Notes Payable | 1,100 | 1,900 | | Total Current Liabilities | $3,900 | $3,600 | | Long-Term Liabilities | | Bonds Payable | 4,100 | 2,100 | | Total Liabilities | $8,000 | $5,700 | | Stockholders Equity | | Common Stock | $200 | $200 | | Retained Earnings | 1,400 | 900 | | Total Stockholders Equity | $1,600 | $1,100 | | Total Liabilities and Stockholders Equity | $9,600 | $6,800 | | LONE PINE COMPANY | | Statement of Income and Retained Earnings | | For the Year Ending December 31,20X2 ($000 Omitted) | | Net Sales* | $36,000 | | Less: Cost of Goods Sold | $20,000 | | Selling Expense | 6,000 | | Administrative Expense | 4,000 | | Interest Expense | 400 | | Income Tax Expense | 2,000 | 32,400 | | Net Income | $3,600 | | Retained Earnings, Jan. 1 | 900 | | Ending Retained Earnings | $4,500 | | Cash Dividends Declared and Paid | 3,100 | | Retained Earnings, Dec. 31 | $1,400 | | *All sales are on account. | Instructions Compute the following items for Lone Pine Company for 20X2, rounding all calcu lations to two decimal places when necessary: a. Quick ratio b. Current ratio c. Inventory-turnover ratio d. Accounts-receivable-turnover ratio e. Return-on-assets ratio f. Net-profit-margin ratio g. Return-on-common-stockholders equity h. Debt-to-total assets i. Number of times that interest is earned |