Drood Company Comparative Balance Sheet Current Year Previous Year Year Before Current Assets Cash $50,000 $100,000 $90,000 Accounts Receivable, net $275,000 $150,000 $100,000 Inventory $580,000 $400,000 $250,000 Prepaid Expenses $25,000 $30,000 $10,000 Total Current Assets $930,000 $680,000 $450,000 Property & Equipment, net $115,000 $150,000 $140,000 Total Assets $1,045,000 $830,000 $590,000 Liabilities & Owner's Equity Current Liabilities Accounts Payable $410,000 $265,000 $190,000 Short-term Payables $175,000 $90,000 $50,000 Total Current Liabilities $585,000 $355,000 $240,000 Long Term Bonds Payable (12%) $50,000 $150,000 $150,000 Total Liabilities $635,000 $505,000 $390,000 Stockholder's Equity Common Stock (100,000 shares) $200,000 $200,000 $200,000 Retained Earnings $248,000 $130,000 $73,000 Total Liabilities and Shareholder's Equity $1,083,000 $835,000 $663,000 Drood Company Comparitive Income Statements Current Year Previous Year Sales $1,100,000 $875,000 Less: Cost of Goods Sold $550,000 $490,000 Gross Margin $550,000 $385,000 Less: Selling & Admin Expenses $295,000 $240,000 Operating Income $255,000 $145,000 Less: Interest Expense $12,000 $18,000 Income Before Taxes $243,000 $127,000 Less: Income Taxes (40%) $97,200 $50,800 Net Income $145,800 $76,200 Less: Dividends $27,800 $19,200 Net Income, Retained $118,000 $57,000 5 Times Interest Earned 6 Debt Ratio 7 Return on Assets 8 Return on Stockholder's Equity

Drood Company Comparative Balance Sheet Current Year Previous Year Year Before Current Assets Cash $50,000 $100,000 $90,000 Accounts Receivable, net $275,000 $150,000 $100,000 Inventory $580,000 $400,000 $250,000 Prepaid Expenses $25,000 $30,000 $10,000 Total Current Assets $930,000 $680,000 $450,000 Property & Equipment, net $115,000 $150,000 $140,000 Total Assets $1,045,000 $830,000 $590,000 Liabilities & Owner's Equity Current Liabilities Accounts Payable $410,000 $265,000 $190,000 Short-term Payables $175,000 $90,000 $50,000 Total Current Liabilities $585,000 $355,000 $240,000 Long Term Bonds Payable (12%) $50,000 $150,000 $150,000 Total Liabilities $635,000 $505,000 $390,000 Stockholder's Equity Common Stock (100,000 shares) $200,000 $200,000 $200,000 Retained Earnings $248,000 $130,000 $73,000 Total Liabilities and Shareholder's Equity $1,083,000 $835,000 $663,000 Drood Company Comparitive Income Statements Current Year Previous Year Sales $1,100,000 $875,000 Less: Cost of Goods Sold $550,000 $490,000 Gross Margin $550,000 $385,000 Less: Selling & Admin Expenses $295,000 $240,000 Operating Income $255,000 $145,000 Less: Interest Expense $12,000 $18,000 Income Before Taxes $243,000 $127,000 Less: Income Taxes (40%) $97,200 $50,800 Net Income $145,800 $76,200 Less: Dividends $27,800 $19,200 Net Income, Retained $118,000 $57,000 5 Times Interest Earned 6 Debt Ratio 7 Return on Assets 8 Return on Stockholder's Equity

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 19P

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Question


	Drood Company
	Comparative Balance Sheet

		Current Year		Previous Year		Year Before
Current Assets
	Cash	$50,000		$100,000		$90,000
	Accounts Receivable, net	$275,000		$150,000		$100,000
	Inventory	$580,000		$400,000		$250,000
	Prepaid Expenses	$25,000		$30,000		$10,000
	Total Current Assets	$930,000		$680,000		$450,000
Property & Equipment, net	$115,000		$150,000		$140,000
Total Assets	$1,045,000		$830,000		$590,000

Liabilities & Owner's Equity
Current Liabilities
	Accounts Payable	$410,000		$265,000		$190,000
	Short-term Payables	$175,000		$90,000		$50,000
	Total Current Liabilities	$585,000		$355,000		$240,000
Long Term Bonds Payable (12%)	$50,000		$150,000		$150,000
Total Liabilities	$635,000		$505,000		$390,000
Stockholder's Equity
	Common Stock (100,000 shares)	$200,000		$200,000		$200,000
	Retained Earnings	$248,000		$130,000		$73,000
Total Liabilities and Shareholder's Equity	$1,083,000		$835,000		$663,000



	Drood Company
	Comparitive Income Statements

		Current Year		Previous Year

	Sales	$1,100,000		$875,000
	Less: Cost of Goods Sold	$550,000		$490,000
	Gross Margin	$550,000		$385,000
	Less: Selling & Admin Expenses	$295,000		$240,000
	Operating Income	$255,000		$145,000
	Less: Interest Expense	$12,000		$18,000
	Income Before Taxes	$243,000		$127,000
	Less: Income Taxes (40%)	$97,200		$50,800
	Net Income	$145,800		$76,200
	Less: Dividends	$27,800		$19,200
	Net Income, Retained	$118,000		$57,000

5	Times Interest Earned
6	Debt Ratio


7	Return on Assets
8	Return on Stockholder's Equity

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