Below are financial statements for Eastnorth Manufacturing. After computing the ratios we discussed in this chapter, discuss
Question:
Below are financial statements for Eastnorth Manufacturing. After computing the ratios we discussed in this chapter, discuss strong and weak points of Eastnorth’s performance.
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...
December 31 2017 2016 2015 ASSETS Cash and marketable securities $25,000 $20,000 $16,000 80,000 Accounts receivable 100,000 56,000 Inventories 125,000 100,000 80,000 Total current assets 250,000 200,000 152,000 Gross plant and equipment 300,000 225,000 200,000 Less: accumulated depreciation -100,000 -75,000 –50,000 Net plant and equipment 200,000 150,000 150,000 50,000 Land 50,000 50,000 Total fixed assets 250,000 200,000 200,000 Total assets $500,000 $400,000 $352,000 LIABILITIES AND EQUITY Accounts payable $78,000 $65,000 $58,000 Notes payable 10,000 10,000 34,000 25,000 25,000 Accrued liabilities 30,000 Total current liabilities 93,000 142,000 100,000 Long-term debt 140,000 100,000 71,000 Total liabilities $282,000 $200,000 $164,000 Common stock $50,000 $50,000 $50,000 ($1 par, 50,000 shares) 100,000 100,000 100,000 Paid-in capital 50,000 Retained earnings 68,000 38,000 Total stockholders' equity 218,000 200,000 188,000 Total liabilities and equity $500,000 $400,000 $352,000 Years Ended December 31 2017 2016 2015 Net revenues or sales $700,000 $600,000 $540,000 Cost of goods sold 450,000 375,000 338,000 Gross profit 250,000 225,000 202,000 Operating expenses: General and administrative 95,000 95,000 95,000 Selling and marketing 56,000 50,000 45,000 Depreciation 25,000 20,000 15,000 Operating income 74,000 60,000 47,000 Interest 14,000 10,000 7,000 Income before taxes 60,000 50,000 40,000 Income taxes (40%) 24,000 20,000 16,000 Net income $36,000 $30,000 $24,000 Number of shares outstanding 50,000 50,000 50,000 Earnings per share $0.72 $0.60 $0.48
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Ratio 2017 2016 2015 Current ratio 18 20 163 Quick ratio 09 10 077 Average payment perio...View the full answer
Introduction to Finance Markets, Investments and Financial Management
ISBN: 978-1119398288
16th edition
Authors: Ronald W. Melicher, Edgar A. Norton
Related Video
Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.
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