Analytical case-complete an income statement and balance sheet using financial ratio data.Partially completed financial statements for Whittaker,
Question:
Analytical case-complete an income statement and balance sheet using financial ratio data.Partially completed financial statements for Whittaker, Inc., follows:
Whitaker, Inc.
Income Statement
For the year ended December 31, 2011
Sales......................$ ?
Cost of goods sold...............$ ?
Gross profit.................$ ?
Operating expenses..............$ ?
Income from operations.............$ ?
Interest expense................$ ?
Income before taxes.............$ ?
Income taxes (20%)..............$ ?
Net income..................$ ?
Whitaker, Inc.
Balance Sheet
31-Dec-11
Current assets:
Cash...................$ ?
Accounts receivable, net............$ ?
Inventory..................$ ?
Total current assets.............. $171,000
Property, plant and equipment, net........$ ?
Total assets..................$ ?
Current liabilities...............$ ?
Bonds payable, 15%.................................................... 70,000
Total liabilities.................$ ?
Owners’ equity:
Common stock, $2 par value.......... $10,000
Additional paid-in capital........... 15,000
Retained earnings...............$ ?
Total owners’ equity.............$ ?
Total liabilities and owners’ equity........$ ?
Additional information:
Financial ratios computed from these financial statements include the following
Current ratio ...............1.9 to 1
Acid-test ratio................1.3 to 1
Debt/equity ratio................2.0 to 1
Inventory turnover...........4.0 times
Accounts receivable turnover.........6.8 times
Times interest earned....................4.45 times
Gross profit ratio....................................40%
Return on investment..................................12%
Earnings per share.....................................$5.52
All sales during the year were made on account. Cash collections during the year xceeded sales by $14,000, and no uncollectible accounts were written off. The balances of the accounts receivable account was $57,000 on January 1, 2011.No common stock was issued during the year. Dividends declared and paid during the year were $7,600. The balance of the inventory account was $48,000 on January 1, 2011. Interest expense on the income statement relates to the 15% bonds payable; $10,000 of these bonds were issued on May 1, 2011; the remaining amount of bonds payable were outstanding throughout the year. All bonds were issued at face amount.
a. Complete the income statement and balance sheet for Whittaker, Inc. Show how each amount was determined.
b. After completing part a, use your answers to recompute each of the financial ratios provided as additional information.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Financial Ratios
The term is enough to curl one's hair, conjuring up those complex problems we encountered in high school math that left many of us babbling and frustrated. But when it comes to investing, that need not be the case. In fact, there are ratios that,...
Step by Step Answer:
a Whittaker Inc Income statement For the Year Ended December 31 2011 Particulars Amount Sales 34000000 Cost of goods sold 20400000 Gross profit 13600000 Operating expenses 9150000 Income from operatio...View the full answer
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
