For each individual ratio for each company, Your comments for each ratio should include more than just a definition or increase or decrease of the ratio. You should focus on interpreting each ratio numberfor the company and support your comments. Use the ratio results by category to form and support conclusion by Liquidity, Solvency and Profitability. Then use to complete the Overall Conclusion as to the financial results of the company (ratios described in the chapters covered and summarized in Chapter 14 of your textbook). Conclude by stating whether the company is the better employment /investment opportunity and why. Stargel Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $500,000 $400,000 Marketable securities 1,010,000 1,000,000 Accounts receivable (net) 740,000 510,000 Inventories 1,190,000 950,000 Prepaid expenses 250,000 229,000 Total current assets $3,690,000 $3,089,000 Long-term investments 2,350,000 2,300,000 Property, plant, and equipment (net) 3,740,000 3,366,000 Total assets $9,780,000 $8,755,000 Liabilities Current liabilities $900,000 $880,000 Long-term liabilities: Mortgage note payable, 10% $200,000 $0 Bonds payable, 10% 1,500,000 1,500,000 Total long-term liabilities $1,700,000 $1,500,000 Total liabilities $2,600,000 $2,380,000 Stockholders' Equity Preferred $0.90 stock, $10 par $500,000 $500,000 Common stock, $5 par 500,000 500,000 Retained earnings 6,180,000 5,375,000 Total stockholders' equity $7,180,000 $6,375,000 Total liabilities and stockholders' equity $9,780,000 $8,755,000 Required: Determine the following measures for 20Y2, rounding to one decimal place, except dollar amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year. 1. Working capital $2,790,000 2. Current ratio 4.1 3. Quick ratio 2.5

For each individual ratio for each company, Your comments for each ratio should include more than just a definition or increase or decrease of the ratio. You should focus on interpreting each ratio numberfor the company and support your comments. Use the ratio results by category to form and support conclusion by Liquidity, Solvency and Profitability. Then use to complete the Overall Conclusion as to the financial results of the company (ratios described in the chapters covered and summarized in Chapter 14 of your textbook). Conclude by stating whether the company is the better employment /investment opportunity and why. Stargel Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $500,000 $400,000 Marketable securities 1,010,000 1,000,000 Accounts receivable (net) 740,000 510,000 Inventories 1,190,000 950,000 Prepaid expenses 250,000 229,000 Total current assets $3,690,000 $3,089,000 Long-term investments 2,350,000 2,300,000 Property, plant, and equipment (net) 3,740,000 3,366,000 Total assets $9,780,000 $8,755,000 Liabilities Current liabilities $900,000 $880,000 Long-term liabilities: Mortgage note payable, 10% $200,000 $0 Bonds payable, 10% 1,500,000 1,500,000 Total long-term liabilities $1,700,000 $1,500,000 Total liabilities $2,600,000 $2,380,000 Stockholders' Equity Preferred $0.90 stock, $10 par $500,000 $500,000 Common stock, $5 par 500,000 500,000 Retained earnings 6,180,000 5,375,000 Total stockholders' equity $7,180,000 $6,375,000 Total liabilities and stockholders' equity $9,780,000 $8,755,000 Required: Determine the following measures for 20Y2, rounding to one decimal place, except dollar amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year. 1. Working capital $2,790,000 2. Current ratio 4.1 3. Quick ratio 2.5

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 1MP

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Question

For each individual ratio for each company, Your comments for each ratio should include more than just a definition or increase or decrease of the ratio. You should focus on interpreting each ratio numberfor the company and support your comments.
Use the ratio results by category to form and support conclusion by Liquidity, Solvency and Profitability. Then use to complete the Overall Conclusion as to the financial results of the company (ratios described in the chapters covered and summarized in Chapter 14 of your textbook). Conclude by stating whether the company is the better employment /investment opportunity and why.

Stargel Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets:
	Cash	$500,000		$400,000
	Marketable securities	1,010,000		1,000,000
	Accounts receivable (net)	740,000		510,000
	Inventories	1,190,000		950,000
	Prepaid expenses	250,000		229,000
		Total current assets	$3,690,000		$3,089,000
Long-term investments	2,350,000		2,300,000
Property, plant, and equipment (net)	3,740,000		3,366,000
Total assets	$9,780,000		$8,755,000
Liabilities
Current liabilities	$900,000		$880,000
Long-term liabilities:
	Mortgage note payable, 10%	$200,000		$0
	Bonds payable, 10%	1,500,000		1,500,000
		Total long-term liabilities	$1,700,000		$1,500,000
Total liabilities	$2,600,000		$2,380,000
Stockholders' Equity
Preferred $0.90 stock, $10 par	$500,000		$500,000
Common stock, $5 par	500,000		500,000
Retained earnings	6,180,000		5,375,000
	Total stockholders' equity	$7,180,000		$6,375,000
Total liabilities and stockholders' equity	$9,780,000		$8,755,000

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except dollar amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

1. Working capital	$2,790,000
2. Current ratio	4.1
3. Quick ratio	2.5
4. Accounts receivable turnover	16
5. Number of days' sales in receivables	22.8	days
6. Inventory turnover	5
7. Number of days' sales in inventory	73	days
8. Ratio of fixed assets to long-term liabilities	2.2
9. Ratio of liabilities to stockholders' equity	0.4
10. Times interest earned	7.6
11. Asset turnover	1.1
12. Return on total assets	11.50	%
13. Return on stockholders’ equity	13.30	%
14. Return on common stockholders’ equity	13.60	%
15. Earnings per share on common stock	$8.55
16. Price-earnings ratio	14
17. Dividends per share of common stock	$0.50
18. Dividend yield	0.40	%

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