There was a bit of concern about one of RBL's newer entities - RBL Paving Company. Management wants you to review the two financial statements below and give your analysis of the company's performance. RBL Paving Company Current Assets: Cash Assets Accounts Receivable Inventory Total Current Assets Fixed Assets: Property, Plant & Equipment Less: Accumulated Depreciation Net Fixed Assets Total Assets Current Liabilities: 200,000 Accounts Payable 300,000 Notes Payable 800,000 1,300,000 Total Current Liabilities Owners' Equity: 2,200,000 Common Stock ($1 Par) 600,000 Capital Surplus 1,600,000 2,900,000 Total Owners' Equity Liabilities Sales Less: Cost of Goods Sold Retained Earnings RBL Paving Company Income Statement for Year Ending December 31, 2021 Dividends Addition to Retained Earnings Total Liabilities and Owners' Equity Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense Taxable Income Less: Taxes Net Income 3,400,000 2,700,000 700,000 682,000 (682,000) 120,000 (802,000) (280.000) (522,000) 0 (522,000) 700,000 600,000 1,300,000 600,000 100,000 100,000 800,000 2,900,000
There was a bit of concern about one of RBL's newer entities - RBL Paving Company. Management wants you to review the two financial statements below and give your analysis of the company's performance. RBL Paving Company Current Assets: Cash Assets Accounts Receivable Inventory Total Current Assets Fixed Assets: Property, Plant & Equipment Less: Accumulated Depreciation Net Fixed Assets Total Assets Current Liabilities: 200,000 Accounts Payable 300,000 Notes Payable 800,000 1,300,000 Total Current Liabilities Owners' Equity: 2,200,000 Common Stock ($1 Par) 600,000 Capital Surplus 1,600,000 2,900,000 Total Owners' Equity Liabilities Sales Less: Cost of Goods Sold Retained Earnings RBL Paving Company Income Statement for Year Ending December 31, 2021 Dividends Addition to Retained Earnings Total Liabilities and Owners' Equity Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense Taxable Income Less: Taxes Net Income 3,400,000 2,700,000 700,000 682,000 (682,000) 120,000 (802,000) (280.000) (522,000) 0 (522,000) 700,000 600,000 1,300,000 600,000 100,000 100,000 800,000 2,900,000
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
Related questions
Question
Required: Evaluate the performance of RBL 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. Current ratio
e. Receivables turnover
Transcribed Image Text:There was a bit of concern about one of RBL's newer entities - RBL Paving Company.
Management wants you to review the two financial statements below and give your
analysis of the company's performance.
RBL Paving Company
Current Assets:
Cash
Assets
Accounts Receivable
Inventory
Total Current Assets
Fixed Assets:
Property, Plant & Equipment
Less: Accumulated Depreciation
Net Fixed Assets
Total Assets
Current Liabilities:
Accounts Payable
200,000
300,000 Notes Payable
800,000
1,300,000 Total Current Liabilities
2,200,000
600,000 Capital Surplus
1,600,000 Retained Earnings
2,900,000
Liabilities
Owners' Equity:
Common Stock ($1 Par)
Dividends
Addition to Retained Earnings
Total Owners' Equity
Total Liabilities and Owners'
Equity
RBL Paving Company
Income Statement for Year Ending December 31, 2021
Sales
Less: Cost of Goods Sold
Less: Administrative Expenses
Less Depreciation
Earnings Before Interest and Taxes
Less: Interest Expense
Taxable Income
Less: Taxes
Net Income
3,400,000
2,700,000
700,000
682,000
(682,000)
120,000
(802,000)
(280.000)
(522,000)
0
(522,000)
700,000
600,000
1,300,000
600,000
100,000
100,000
800,000
2,900,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step 1: Definition
VIEWStep 2: Calculation of Return on equity (ROE) & Interpretation
VIEWStep 3: Calculation of Total Assets Turnover & Interpretation
VIEWStep 4: Calculation of Return on Assets (ROA) & Interpretation
VIEWStep 5: Calculation of Current Ratio & Interpretation
VIEWStep 6: Calculation of Receivables Turnover & Interpretation
VIEWSolution
VIEW
Step by step
Solved in 7 steps with 10 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education