Additional data as of December 31, 2004: Inventory = $100,000; Total assets = $900,000; Common stockholders' equity
Question:
Additional data as of December 31, 2004: Inventory = $100,000; Total assets = $900,000; Common stockholders' equity = $540,000
1. Compute the following listed ratios for 2006 and 2005 showing supporting calculations.
a. Current ratio
b. Debt to total Assets
c. Times interest earned
d. Inventory turnover
e. Profit margin ratio
f. Return on common stockholders' equity
g. Return on assets
Perform horizontal and vertical analysis on Westward’s financial statements, show your results.
| Westward Corporation | ||
| Balance Sheet | ||
| Year 2006 | ||
| | | |
| Assets | Amount | Amount |
| Current assets | | |
| Cash and temporary | | |
| Investments | $ 30,000 | |
| Accounts receivable | $ 70,000 | |
| Inventories | $ 120,000 | |
| Total current assets | $ 220,000 | |
| Property, plant, and | | |
| equipment (net) | $ 780,000 | |
| Total assets | | $ 1,000,000 |
| | | |
| Liabilities and Stockholders' Equity | | |
| Current liabilities | $ 80,000 | |
| Long-term liabilities | $ 300,000 | |
| Common stockholders' equity | $ 620,000 | |
| Total liabilities and stockholders' equity | | $ 1,000,000 |
| Westward Corporation | ||
| Income Statement | ||
| For the Year Ended December 31, 2006 | ||
| | | |
| Revenues | | $ 2,000,000 |
| Expenses | | |
| Cost of goods sold | $ 1,080,000 | |
| Selling and administrative | | |
| expenses | $ 495,000 | |
| Interest expense | $ 30,000 | |
| Total expenses | | $ 1,605,000 |
| Income before income taxes | | $ 395,000 |
| Income tax expense | | $ 140,000 |
| Net income | | $ 255,000 |
| Westward Corporation | ||
| Balance Sheet | ||
| Year 2005 | ||
| | | |
| Assets | Amount | Amount |
| Current assets | | |
| Cash and temporary | | |
| investments | $ 40,000 | |
| Accounts receivable | $ 90,000 | |
| Inventories | $ 150,000 | |
| Total current assets | $ 280,000 | |
| Property, plant, and | | |
| equipment (net) | $ 800,000 | |
| Total assets | | $ 1,080,000 |
| | | |
| Liabilities and Stockholders' Equity | | |
| Current liabilities | $ 140,000 | |
| Long-term liabilities | $ 320,000 | |
| Common stockholders' equity | $ 620,000 | |
| Total liabilities and stockholders' equity | $ 1,080,000 | |
| Westward Corporation | ||
| Income Statement | ||
| For the Year Ended December 31, 2005 | ||
| | | |
| Revenues | | $ 2,500,000 |
| Expenses | | |
| Cost of goods sold | $ 1,750,000 | |
| Selling and administrative | | |
| expenses | $ 500,000 | |
| Interest expense | $ 30,000 | |
| Total expenses | | $ 2,280,000 |
| Income before income taxes | | $ 220,000 |
| Income tax expense | | $ 77,000 |
| Net income | | $ 143,000 |
Expert Answer:
Compute the following listed ratios for 2006 and 2005 showing supporting calculations 2006 2005 Formula a Current ratio 275 200 Current Ratio Current ... View the full answer
