At the end of 2013, the following accounting information is available for Bainbridge and Crist Companies:

a. Set up the preceding spreadsheet. Complete the balance sheet and income statement. Use Excel formulas for rows that “total” on the balance sheet and for gross margin and net income on the income statement.
b. Calculate the designated ratios using Excel formulas.
c. Which company is more likely to be able to pay its current liabilities?
d. Which company carries a greater financial risk?
e. Which company is more profitable from the stockholders’ perspective?
f. Based on profitability alone, which company performed better?
g. Assume that sales increased 10 percent and that the additional sales were made on account. Adjust the balance sheet and income statement for the effects. Notice that Retained Earnings will also need to be adjusted to keep the balance sheet in balance. What is the resultant effect on theratios?

  • CreatedOctober 26, 2013
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