The incomplete financial statements of Bloggs Ltd appear below: BLOGGS LTD Comparative financial information 2020 2019 Cash
Question:
The incomplete financial statements of Bloggs Ltd appear below:
BLOGGS LTD
Comparative financial information
2020 | 2019 | |
Cash | 25,000 | 40,000 |
Marketable securities | 15,000 | 60,000 |
Accounts receivable (net) | 50,000 | 30,000 |
Inventory | 150,000 | 170,000 |
Property, plant and equipment (net) | 160,000 | 200,000 |
Total assets | 400,000 | 500,000 |
Accounts payable | 20,000 | 30,000 |
Short-term notes payable | 40,000 | 90,000 |
Bonds payable | 80,000 | 160,000 |
Ordinary shares | 170,000 | 145,000 |
Retained earnings | 90,000 | 75,000 |
Total liabilities and equity | 400,000 | 500,000 |
Net sales | 360,000 | 520,000 |
Cost of sales | 184,000 | 240,000 |
Gross profit | 176,000 | 280,000 |
Total expenses | 74,000 | 120,000 |
Profit before income taxes | 102,000 | 160,000 |
Income tax expense | 30,000 | 35,000 |
Profit | 72,000 | 125,000 |
Additional information:
1. Inventory balance in 2018 was $140,000
2. Receivables (net) balance in 2018 was $40,000.
3. The total asset balance in 2018 was $460,000
Required:
(1) Using the financial statements, compute the following ratios for the Boggs Ltd for 2020 (2 marks).
1. Current ratio _________
2. Receivables turnover _________
3. Profit margin _________
4. Return on assets _________
(2) By using ratios, explain the change in liquidity and profitability of Boggs Ltd from 2019 to 2020 (2 marks).
Word limit: 100
(Type your response directly into the template in the text box below. )
Accounting
ISBN: 978-0324401844
22nd Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac