Heartland Inc. is a medium-size company that has been in business for 20 years. The industry has
Question:
Ratio Industry Average
Current ratio ............ 1.23
Acid-test (quick) ratio ......... 0.75
Accounts receivable turnover ....... 33 times
Inventory turnover ........... 29 times
Debt-to-equity ratio ............ 0.53
Times interest earned ......... 8.65 times
Return on sales ............. 6.57%
Asset turnover ............ 1.95 times
Return on assets ............ 12.81%
Return on common stockholders equity . 17.67%
The financial statements to be submitted to the bank in connection with the loan follow.
Required
1. Prepare a columnar report for the controller of Heartland Inc. comparing the industry averages for the ratios published by the trade association with the comparable ratios for Heartland. For Heartland, compute the ratios as of December 31, 2010, or for the year ending December 31, 2010, whichever is appropriate.
2. Briefly evaluate Heartlands ratios relative to the industry averages.
3. Do you think that the bank will approve the loan? Explain youranswer.
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...
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Related Book For
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton
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