you to review the two financial statements below and give your analysis of the company’s performance.
There was a bit of concern about one of Big Rock’s newer entities – Big Rock Paving
Company. Management wants you to review the two financial statements below and give
your analysis of the company’s performance.
Big Rock Paving Company
Assets Liabilities
Current Assets: Current Liabilitie Cash 500,000 Accounts Payable 700,000
Accounts Receivable 300,000 Notes Payable 500,000
Inventory 800,000
otal Current Assets 1,300,000 Total Current Liabilities 1,200,000
Fixed Assets: Owners’ Equity:
Property, Plant & Equipment 2,200,000 Common Stock ($1 Par) 600,000
Less:
Net Fixed Assets 1,600,000
Total Assets 2,900,000 Total Owners’ Equity 800,000
Total Liabilities and Owners’ Equity 2,900,000
Big Rock Paving Company
Income Statement for Year Ending December 31, 2021
Sales 3,400,000
Less: Cost of Goods Sold 2,700,000
Less: Administrative Expenses 700,000
Less Depreciation 682,000
Earnings Before Interest and Taxes (682,000)
Less: Interest Expense 120,000
Taxable Income (802,000)
Less: Taxes (280,000)
Net Income (522,000)
Dividends 0
Addition to Retained Earnings (522,000)
Required: Evaluate the performance of Big Rock Paving Company using the below
ratios. Define each ratio, perform the calculation, and provide an explanation of the
result.
a. Return on equity
b. Total assets turnover
c. Return on assets
d.
e. Receivables turnover
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