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Industry Average Ratio Actual 2003 Actual 2002 Current ratio 1.80 1.84 Quick ratio Inventory turnover Average collection 0.70 0.78 2.50 2.59

Industry Average Ratio Actual 2003 Actual 2002 Current ratio 1.80 1.84 Quick ratio Inventory turnover Average collection 0.70 0.78 2.50 2.59

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A. Use the preceding financial statements to complete the following table. Assume that the industry averages given in the table are applicable for both 2002 and 2003. Thank you

89 a. Use the preceding financial statements to complete the following table. Assume that the industry averages given in the table are applicable for both CHAPTER 2 Financial Statements and Analysis Assum preceding financial statements to complete the following table. 2002 and 2003. Industry averige Ratio Actial 2002 Actual-2003 Current ratio 1.80 1.84 Quick ratio Inventory turnover Average collection period Debt ratio 0.70 0.78 2.50 2.59 37 days 36 days 65% 67% Times interest earned ratio 3.8 4.0 Gross profit margin Net profit margin Return on total assets 38% 40% 3.5% 3.6% 4.0% 4.0% Return on common equity Market/book ratio 9.5% 1.1 8.0% 1.2 "Based on a 360-day year and on end-of-year figures.
Transcribed Image Text:89 a. Use the preceding financial statements to complete the following table. Assume that the industry averages given in the table are applicable for both CHAPTER 2 Financial Statements and Analysis Assum preceding financial statements to complete the following table. 2002 and 2003. Industry averige Ratio Actial 2002 Actual-2003 Current ratio 1.80 1.84 Quick ratio Inventory turnover Average collection period Debt ratio 0.70 0.78 2.50 2.59 37 days 36 days 65% 67% Times interest earned ratio 3.8 4.0 Gross profit margin Net profit margin Return on total assets 38% 40% 3.5% 3.6% 4.0% 4.0% Return on common equity Market/book ratio 9.5% 1.1 8.0% 1.2 "Based on a 360-day year and on end-of-year figures.
2-20 Financial statement analysis The financial statements of Zach Industries for the year ended December 31, 2003, follow. Kiza Zach ladustics for the Year oded December 31,2003 December 31, 2003 Sales revenue $160,000 $233S Less: Cost of goods sold 000'901 Cash Gross profits $ 54,000 00S Marketable securities Less: Operating expenses Accounts receivable $ 16,000 00000 Selling expense Inventories 45,500 000'0 0000 0 General and administrative expenses Total current assets Lease expense pur Buildings and equipment to 000 Depreciation expense Total operating expense $ 37,000 Less: Accumulated depreciation 38,000 000 0 6,100 Operating profits Net fixed assets $ 78,000 Less: Interést expense Total assetS Net profits before taxes 4,360 Liabilines and Stockliolderg Fquity Less: Taxes Net profits after taxes %246,540 Accounts payable $ 22,000 Notes payable Total current liabilities $ 22,950 $ 31,500 Long-term debt Common stock Retained earnings 2426,550 Total liabilities and stockholders' equity The firm's 3,000 outstanding shares of common stock closed 2003 at a price of $25 per share.
Transcribed Image Text:2-20 Financial statement analysis The financial statements of Zach Industries for the year ended December 31, 2003, follow. Kiza Zach ladustics for the Year oded December 31,2003 December 31, 2003 Sales revenue $160,000 $233S Less: Cost of goods sold 000'901 Cash Gross profits $ 54,000 00S Marketable securities Less: Operating expenses Accounts receivable $ 16,000 00000 Selling expense Inventories 45,500 000'0 0000 0 General and administrative expenses Total current assets Lease expense pur Buildings and equipment to 000 Depreciation expense Total operating expense $ 37,000 Less: Accumulated depreciation 38,000 000 0 6,100 Operating profits Net fixed assets $ 78,000 Less: Interést expense Total assetS Net profits before taxes 4,360 Liabilines and Stockliolderg Fquity Less: Taxes Net profits after taxes %246,540 Accounts payable $ 22,000 Notes payable Total current liabilities $ 22,950 $ 31,500 Long-term debt Common stock Retained earnings 2426,550 Total liabilities and stockholders' equity The firm's 3,000 outstanding shares of common stock closed 2003 at a price of $25 per share.
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