P & B Manufacturing

Comparative Balance Sheet

$($dollars in millions$)$

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable

Inventory

Total current assets

Property, plant and equipment

Less: accumulated depreciation

Net property, pland and equipment

Total assets

$\backslash$table$[[$$$,49,$$$,79],[$$$,645,$$$,580],[$$$,660,$$$,615],[$$$,1,354,$$$,1,274],[$$$,1,515,$$$,1,466],[$$$,765,$$$,641],[$$$,750,$$$,825],[$$$,2,104,$$$,2,099]]$

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

Accrued liabilities

Income taxes payable

Total current liabilities

Bonds payable

Total liabilities

Stockholders' equity:

Common stock

Retained earnings

Total stockholders' equity

Total liabilities and stockholders' equity

$\backslash$table$[[,250,$$$,155],[$$$,190,$$$,165],[$$$,77,$$$,71],[$$$,517,$$$,391],[$$$,450,$$$,620],[$$$,967,$$$,1,011],[,,,],[$$$,160,$$$,160],[,977,$$$,928],[$$$,1,137,$$$,1,088],[$$$,2,104,$$$,2,099]]$

P & B Manufacturing

Income Statement

For Year Ended Decemer $31$

$($dollars in millions$)$

Sales

Cost of goods sold

Gross margin

Selling and administrative expense

Net operating income

Non operating items:

Gain on sales of equipment

Income before taxes

Income taxes

Net income

$\backslash$table$[[$$$,3,600],[$$$,2,550],[$$$,1,050],[$$$,895],[$$$,155],[$$$,3],[$$$,158],[$$$,55],[,103]]$

P & B Manufacturing also provided the following information:

$1$ The company sold equipment that had an original cost of $$13$ million and accumulated depreciation of $$8$ million. The cash proceeds from the sale were $$8$ million. The gain on the sale was $$3$ million

$2$ The company did not issue any new bonds during the year

$3$ The company paid a cash dividend during the year

$4$ The company did not complete any common stock transactions during the year

Required:

Using the indirect method, prepare a Statement of Cash Flows for the year

To help P & B Manufacturing assess its liquidity at the end of the year calculate the following:

a$.$ Current ratio

b$.$ Acid$-$test $($quick$)$ ratio

To help P & B Manufacturing assess its asset management calculate the following:

a$.$ Average collection period $($assuming all sales are on account$)$

b$.$ Average sale period

To help P & B Manufacturing assess its debt management calculate the following:

a$.$ Debt$-$to$-$equity ratio at the end of the year

b$.$ Equity multiplier

To help P & B Manufacturing assess its profitability calculate the following

a$.$ Net profit margin percentage

b$.$ Return on equity

To help P & B Manufacturing assess its market performance, calculate the following $($assume the par value of the company's common stock is $$10$ per share$)$

a$.$ Earnings per share

b$.$ Dividend payout ratio