The financial statements for Royale and Cavaller companies are summarized here: Royale Company $ 29,000 59,000...

  

Transcribed Image Text:

The financial statements for Royale and Cavaller companies are summarized here: Royale Company $ 29,000 59,000 Balance Sheet Cash Accounts Receivable, Net Inventory Equipment, Net Other Assets Total Assets Current Liabilities Notes Payable (long-term). Connon Stock (par $20) Additional Paid-In Capital Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Sales Revenue Cost of Goods Sold Other Expenses Net Income Other Data Per share price at end of year Selected Data from Previous Year Accounts Receivable, Net Notes Payable (long-term) Equipment, Net Inventory Total Stockholders' Equity 118,000 558,000 144,000 $908,000 $ 128,000 198,000 484,000 54,000 44,000 $ 908,000 $ 812,000 484,000 244,000 $ 84,000 $ 19.00 $ 51,000 198,000 558,000 99,000 582,000 Cavalier Company $ 49,000 20,000 33,000 168,000 50,000 $ 320,000 $ 23,000 63,000 214,000 8,000 12,000 $ 320,000 $ 292,000 154,000 99,000 $ 39,000 $ 17.00 $ 18,000 63,000 168,000 42,000 234,000 These two companies are in the same business and state but different citles. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Royale Company wants to borrow $79,000 cash and Cavaller Company is asking for $34,000. The loans will be for a two-year period. Both companies estimate bad debts based on an aging analysis, but Cavaller has estimated slightly higher uncollectible rates than Royale. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the year's average and all sales are on account. Required: 1. Calculate the following ratios. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.) Ratio Tests of Profitability: 1. Net Profit Margin 2. Gross Profit Percentage 3. Fixed Asset Turnover 4. Return on Equity 5. Earnings per Share 6. Price/Earnings Ratio Tests of Liquidity: 7. Receivables Turnover 7. Days to Collect 8. Inventory Turnover 8. Days to Sell 9. Current Ratio Tests of Solvency: 10. Debt-to-Assets Royale Company % % % Cavalier Company % % % The financial statements for Royale and Cavaller companies are summarized here: Royale Company $ 29,000 59,000 Balance Sheet Cash Accounts Receivable, Net Inventory Equipment, Net Other Assets Total Assets Current Liabilities Notes Payable (long-term). Connon Stock (par $20) Additional Paid-In Capital Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Sales Revenue Cost of Goods Sold Other Expenses Net Income Other Data Per share price at end of year Selected Data from Previous Year Accounts Receivable, Net Notes Payable (long-term) Equipment, Net Inventory Total Stockholders' Equity 118,000 558,000 144,000 $908,000 $ 128,000 198,000 484,000 54,000 44,000 $ 908,000 $ 812,000 484,000 244,000 $ 84,000 $ 19.00 $ 51,000 198,000 558,000 99,000 582,000 Cavalier Company $ 49,000 20,000 33,000 168,000 50,000 $ 320,000 $ 23,000 63,000 214,000 8,000 12,000 $ 320,000 $ 292,000 154,000 99,000 $ 39,000 $ 17.00 $ 18,000 63,000 168,000 42,000 234,000 These two companies are in the same business and state but different citles. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Royale Company wants to borrow $79,000 cash and Cavaller Company is asking for $34,000. The loans will be for a two-year period. Both companies estimate bad debts based on an aging analysis, but Cavaller has estimated slightly higher uncollectible rates than Royale. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the year's average and all sales are on account. Required: 1. Calculate the following ratios. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.) Ratio Tests of Profitability: 1. Net Profit Margin 2. Gross Profit Percentage 3. Fixed Asset Turnover 4. Return on Equity 5. Earnings per Share 6. Price/Earnings Ratio Tests of Liquidity: 7. Receivables Turnover 7. Days to Collect 8. Inventory Turnover 8. Days to Sell 9. Current Ratio Tests of Solvency: 10. Debt-to-Assets Royale Company % % % Cavalier Company % % %

Answer rating: 100% (QA)

Id be happy to help you calculate these ratios Here are the calculations for each ratio based on the ... View the full answer