Part IFinancial Statement and Ratio Analysis

HAINZ COMPANY

Income Statement

For the Year Ended December 31,

2021 2020

Net sales.................................................................................... $400,000 $380,000

Cost of goods sold.................................................................. 250,000 209,000

Operating expenses............................................................ 42,000 95,000

Interest expense........................................................................... 18,000 17,100

Income tax expense..................................................................... 27,000 17,670

HAINZ COMPANY

Comparative Balance Sheet

December 31,

Assets 2021 2020

Cash................................................................................... $ 20,000 $ 40,000

Short-term investments............................................. 20,000 60,000

Accounts receivable (net).......................................... 40,000 30,000

Inventory............................................................................... 60,000 70,000

Property, plant and equipment (net)....................... 260,000 300,000

Total assets .............................................................. $400,000 $500,000

Liabilities and stockholders' equity

Accounts payable............................................................... $ 20,000 $ 30,000

Short-term notes payable................................................ 40,000 90,000

Bonds payable........................................................................ 80,000 160,000

Common stock....................................................................... 150,000 150,000

Retained earnings.................................................................... 110,000 70,000

Total liabilities and stockholders' equity........... $400,000 $500,000

Additional information:

a. Cash dividends of $23,000 were declared and paid in 2021.

b. Weighted-average number of shares of common stock outstanding during 2021 was 30,000 shares.

c. Market value of common stock on December 31, 2021, was $21 per share.

Instructions

1. Prepare an Income Statement that present the gross profit, operating profit, net profit, and earnings per share (EPS).

2.Using the financial statements and additional information, compute the financial ratios for Hainz Company for 2021. Show all computations generate by financial calculator (https://www.fncalculator.com/), and classified in the following categories: Liquidity, Activity, Debt, Profitability and Market.

3. Prepare a Common Size - Income Statement for the year 2021, 2020