Chapter 3
Questions 13 -15
Input area:
2011 2012 2011 2012
Output area:
2011 #13 2012 #13 #14 #15
Current assets
Cash 9,279$ 2.67% 11,173$ 2.93% 1.2041 1.0964
Accounts receivable 23,683 6.81% 25,760 6.75% 1.0877 0.9904
Inventory 42,636 12.26% 46,915 12.29% 1.1004 1.0019
Net plant and equipment 272,047$ 78.25% 297,967$ 78.04% 1.0953 0.9973
Current Assets Current liabilities
Cash 9,279$ 11,173$ Accounts payable 41,060$ 43,805$
Accounts receivable 23,683 25,760 Notes payable 16,157 16,843
Inventory 42,636 46,915 Total 57,217$ 60,648$
Total 75,598$ 83,848$
Chapter 3
Input area:
Output area:
Liabilites and Owners’ Equity
2011 2012
Questions 16,17
Chapter 3
Question 18
Input area:
Output area:
Profit margin 0.0245
Total assets 2,805$
Debt-equity ratio 1.40
Return on equity 13%
Chapter 3
Question 19
Input area:
Output area:
Total sales 2,156,627$
Credit sales 1,509,639$
Receivables turnover 12.75
Net income 179,000$
Profit margin 8.30%
Accounts receivable 118,370$
Percent credit sales 70%
Chapter 3
Question 20
Input area:
Output area:
Current assets 1,183.00$
Net income 610.85$
Total equity 3,301.89$
Long-term debt 1,777.94$
Total debt 2,687.94$
Total assets 5,989.83$
Long-term debt ratio 0.35
Current ratio 1.30
Current liabilities 910$
Profit margin 9.5%
Return on equity 18.5%
Chapter 3
Question 21
Input area:
Output area:
Child: Profit = Child’s payment = 4.00%
Store: Profit margin = Net income = 2.00%
The advertisement is referring to the store’s profit margin, but a more
appropriate earnings measure for the firm’s owners is the return on
Child’s payment 2.00$
Amount purchased 50$
Net income 13.6$
Total assets 410$
Total debt 280$
Chapter 3
Question 22
Input area:
Output area:
Firm A
Firm B
Chapter 3
Question 23
Input area:
Output area:
Earnings before taxes 23,007.58$
Net income 15,185$
Tax rate 34%
Total interest expense 3,806$
Depreciation expense 2,485$
Chapter 3
Question 24
Input area:
Output area:
Current assets 696,000$
Current liabilities 435,000$
Quick ratio 0.95
Inventory turnover 6.20
Current ratio 1.60
Chapter 3
Question 25
Input area:
Output area:
As long as both net income and sales are measured
in the same currency, there is not problem; in fact,
except for some market value ratios like EPS and
BVPS, none of the financial ratios discussed in the
text are measured in terms of currency. This is one
reason why financial ratio analysis is widely used in
international finance to compare business operations
of firms and/or divisions across national economic
Net income 45,831-£
Input area:
Tax rate 35%
Cost of goods sold 253,122
Interest paid 14,300
Taxable income 67,354$
Taxes (35%) 23,574
Retained earnings 23,780
Output area:
26) Short-term solvency ratios:
Asset utilization ratios:
Long-term solvency ratios:
Profitability ratios:
28)
For Period Ending December 31, 2012
Operating activities
Net income 43,780$
Increase in accounts payable 4,236
Increase in other current liabilities 3,982
Increase in accounts receivable (2,787)
Increase in inventory (1,763)
Investment activities
Financing activities
Decrease in notes payable (1,200)$
Dividends paid (20,000)
Increase in long-term debt 15,000
SMOLIRA GOLF CORP.
SMOLIRA GOLF CORP.
Questions 26-28
Chapter 3
Statement of Cash Flows
SMOLIRA GOLF, INC.
2012 Income statement
Chapter 3
Question 29
Input area:
Output area:
Earnings per share 1.75$
Book value per share 11.34$
Net income 43,780$
Common stock outstanding 25,000
Stock price 43$
Dividends paid 20,000
Total equity 283,606
Growth rate 9%
Chapter 3
Question 30
Input area:
Output area:
Market value of equity 1,075,000$
Book value of debt 148,773$
Common stock outstanding 25,000
Stock price 43$
Current liabilities 53,773$
Long-term debt 95,000$
Book value of assets 432,379$