Avenger Corporations balance sheet and income statement is listed below. Balance Sheet This Year Last Year Cash
Question:
Avenger Corporation’s balance sheet and income statement is listed below.
| Balance Sheet | This Year | Last Year |
| Cash | 50,000 | 40,000 |
| Accounts receivable | 80,000 | 60,000 |
| Inventories | 180,000 | 110,000 |
| Plant & equipment | 300,000 | 260,000 |
| Less accumulated depreciation | -40,000 | -20,000 |
| Total assets | 570,000 | 450,000 |
| Accounts payable | 100,000 | 150,000 |
| Accrued liabilities | 70,000 | 50,000 |
| Mortgage payable | 80,000 | --- |
| Common stock | 130,000 | 90,000 |
| Retained earnings | 190,000 | 160,000 |
| Total liabilities and equity | 570,000 | 450,000 |
| Income Statement | This Year | Last Year |
| Net Sales | 680,000 | 600,000 |
| Cost of goods sold | 410,000 | 330,000 |
| Gross profit | 270,000 | 270,000 |
| Operating expenses | 190,000 | 192,000 |
| Operating income | 80,000 | 78,000 |
| Interest expense | 7,000 | 2,000 |
| Profit before taxes | 73,000 | 76,000 |
| Taxes | 22,000 | 22,800 |
| Net income | 51,000 | 53,200 |
Other data:
Cash dividends paid this year were P21,000.
The change in accumulated depreciation account is the depreciation for the year.
Prepare a horizontal analysis of Avenger’s balance sheet in good form. Show the change in amount and percentage change, rounding percentages to two decimal place.
Prepare a vertical analysis of Avenger’s income statement and reconcile the retained earnings account. Round percentages to two decimal places.
Prepare a common-size income statement of Avengers and reconcile the retained earnings account. Round percentages to two decimal places.
Prepare a common-size balance sheet of Avenger’s and reconcile the retained earnings account. Round percentages to two decimal places.
Based on the financial statements prepared, calculate the (a) Current ratio (b) Quick ratio (c) Debt ratio (d) Gross profit ratio (e) Inventory Turnover ratio (f) Accounts Receivable turnover (g) Days sales outstanding (h) Days sales in inventory.
Based upon your answers to parts (1) through (4) would you provide a credit line to this company? Support your decision by reference to your work in parts (1) through (4).
Expert Answer:
Ratio calculation Avenger Corporation Balance Sheet as on 311220xx this year Amount Particulars Part... View the full answer
