Carson Electronics’ management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheet and income statements for the two firms are as follows: Calculate the following ratios for both Carson and BGT: a) Debt ratio: b) Average collection period: c) Fixed asset turnover: d) Return on equity:
Carson Electronics’ management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheet and income statements for the two firms are as follows: Calculate the following ratios for both Carson and BGT: a) Debt ratio: b) Average collection period: c) Fixed asset turnover: d) Return on equity:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Carson Electronics’ management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheet and income statements for the two firms are as follows:
Calculate the following ratios for both Carson and BGT:
a) Debt ratio:
b) Average collection period:
c) Fixed asset turnover:
d)
Transcribed Image Text:Carson Electronics, Inc.
Balance Sheet ($000)
BGT Electronics, Inc.
Balance Sheet ($000)
Cash
Accounts receivable
Inventories
Current assets
Net fixed assets
Total assets
$ 2,000
4,500
1,500
$ 8,000
16,000
$24,000
$ 1,500
6,000
2,500
$10,000
25,000
$35,000
Accounts payable
Accrued expenses
Short-term notes payable
Current liabilities
$ 2,500
1,000
3,500
$ 7,000
8,000
9,000
$24,000
$ 5,000
1,500
1,500
$ 8,000
4,000
23,000
$35,000
Long-term debt
Owners' equity
Total liabilities and owners' equity
Carson Electronics, Inc.
Income Statement ($000)
BGT Electronics, Inc.
Income Statement ($000)
Net sales (all credit)
Cost of goods sold
Gross profit
Operating expenses
Net operating income
Interest expense
Earnings before taxes
Income taxes (40%)
$48,000
(36,000)
$12,000
(8,000)
$ 4,000
(1,150)
2,850
(1,140)
$ 1,710
$70,000
(42,000)
$28,000
(12,000)
$16,000
(550)
15,450
(6,180)
$ 9,270
Net income
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