Selected year-end financial
statements of McCord Corporation follow. (All sales were on credit; selected balance
sheet amounts at December 31, 2010, were inventory, $32,400; total assets,
$182,400; common stock, $90,000; and retained earnings, $31,300.)
P17-4A
Calculation of financial statement ratios
P17-4A
Selected year-end financial statements of McCord Corporation
follow. (All sales were on credit; selected balance sheet amounts at December
31, 2010, were inventory, $32,400; total assets, $182,400; common stock,
$90,000; and retained earnings, $31,300.)
McCORD CORPORATION
Income Statement
For Year Ended December 31, 2011
Sales . . . . . . . . . . . . . .
. . . . . . . . $348,600
Cost of goods sold . . . . . . .
. . . 229,150
Gross profit . . . . . . . . . .
. . . . . . 119,450
Operating expenses . . . . . . .
. . 52,500
Interest expense . . . . . . . .
. . . . 3,100
Income before taxes . . . . . . .
. . 63,850
Income taxes . . . . . . . . . .
. . . . . 15,800
Net income . . . . . . . . . . .
. . . . . $ 48,050
McCORD CORPORATION
Balance Sheet
December 31, 2011
Assets
Liabilities
and Equity
Cash
. . . . . . . . . . . . . . . . . . $
9,000 Accounts
payable . . . . . . . . . . . . . . . . . . . . $ 16,500
Short-term
investments . . . . 7,400 Accrued wages payable . . . . . .
. . . . . . . . . . 2,200
Accounts
receivable, net . . 28,200 Income taxes payable . .
. . . . . . . . . . . . . . . 2,300
Notes
receivable (trade)* . . 3,500 Long-term note payable, secured
Merchandise
inventory . . . 31,150 by mortgage on plant
assets . . . . . . . . . . 62,400
Prepaid
expenses . . . . . . . . 1,650 Common stock . . . . . . . . . . .
. . . . . . . . . . . 90,000
Plant
assets, net . . . . . . . . . 152,300
Retained earnings . . . . . . .
. . . . . . . . . . . . . 59,800
Total
assets . . . . . . . . . . . . . $233,200
Total liabilities and equity . . .
. . . . . . . . . . . $233,200
*
These are short-term notes receivable arising from customer (trade) sales.
Required
Compute the following: (1) current
ratio, (2) acid-test ratio, (3) days’ sales uncollected, (4) inventory
turnover, (5) days’ sales in inventory, (6) debt-to-equity ratio, (7) times
interest earned, (8) profit margin ratio,
(9) total asset turnover, (10) return
on total assets, and (11) return on common stockholders’ equity.
Check
Acid-test ratio, 2.3 to 1: Inventory turnover, 7.2
File
name: P17-4A-McCord-Corporation.xls File type: XLS Price: $7
