Statement of Financial Position ($ in thousands) Statement of Comprehensive Income ($ in thousands) 2011 2012 2011 2012 ASSETS Sales 1,327,610 1,501,726 Cash 84,527 60,806 Less Cost of Sales 1,025,425) (1,147,025) Accounts Receivables 136,629 194,096 Gross Profit 302,185 354,701 Inventories 107,876 137,448 Less Selling, general and administrative expense (129,986) (125,219) Prepaid Expenses 21,727 32,413 Less Depreciation (47,511) (49,346) Other Current assets 31,287 34,383 Operating Profit 124,688 180,136 Total Current Assets 382,046 459,146 Less Interest Expense (19,352) (17,024) Gross Property, Plant and equipment 812,428 874,301 Non-Operating Income 7,809 6,659 Accumulated Depreciation (420,501) (469,847) Income before taxes 113,145 169,771 Net Property, Plant and equipment 391,927 404,454 Provision for Income Taxes (42,500) (63,670) Investments - 2,730 Net Income 70,645 106,101 Other Assets 19,436 9,555 Total Assets 793,409 875,885 Reconciliation of Retained Earnings ($ in thousands) LIABILITIES Retained earnings, December 2011 531,695 Short-term Notes 15,000 15,000 2012 Net Income 106,101 Notes Payables 19,036 18,159 dividends paid 26,912 Account Payable 76,915 117,757 Other gains 191 Taxes Payable 10,529 11,901 Retained earnings, December 2012 611,075 Accrued Expenses 101,465 119,685 Total Current Liabilities 222,945 282,502 Long-term Liabilities 128,102 113,307 Other Liabilities 125,874 114,166 Total Liabilities 476,921 509,975 EQUITY Common Stock 289 289 Paid-in-Capital 37,776 37,422 Retained Earnings 531,695 611,075 Less: Treasury (253,272) (282,876) Total Equity 316,488 365,910 Total Liabilities and Equity 793,409 875,885 Calculate the following financial Ratios for 2012 Current Ratio 5 times Average Collection period 75days Accounts Receivables turnover 87times/year Inventory turnover 79times/year Operating Income Return on Investment 8% Operating Profit Margin 3% Total Asset Turn over 18times Debt Ratio 58% Times Interest earned 93times 2. What are 4 limitations of ratio analysis 3. What are the 4 questions asked in Ratio Analysis? 5. What are the two ways Financial Ratios are used to make meaningful comparisons 6. Name a ratio that is both a Liquidity and a Operating Profitability ratio

Statement of Financial Position ($ in thousands) Statement of Comprehensive Income ($ in thousands) 2011 2012 2011 2012 ASSETS Sales 1,327,610 1,501,726 Cash 84,527 60,806 Less Cost of Sales 1,025,425) (1,147,025) Accounts Receivables 136,629 194,096 Gross Profit 302,185 354,701 Inventories 107,876 137,448 Less Selling, general and administrative expense (129,986) (125,219) Prepaid Expenses 21,727 32,413 Less Depreciation (47,511) (49,346) Other Current assets 31,287 34,383 Operating Profit 124,688 180,136 Total Current Assets 382,046 459,146 Less Interest Expense (19,352) (17,024) Gross Property, Plant and equipment 812,428 874,301 Non-Operating Income 7,809 6,659 Accumulated Depreciation (420,501) (469,847) Income before taxes 113,145 169,771 Net Property, Plant and equipment 391,927 404,454 Provision for Income Taxes (42,500) (63,670) Investments - 2,730 Net Income 70,645 106,101 Other Assets 19,436 9,555 Total Assets 793,409 875,885 Reconciliation of Retained Earnings ($ in thousands) LIABILITIES Retained earnings, December 2011 531,695 Short-term Notes 15,000 15,000 2012 Net Income 106,101 Notes Payables 19,036 18,159 dividends paid 26,912 Account Payable 76,915 117,757 Other gains 191 Taxes Payable 10,529 11,901 Retained earnings, December 2012 611,075 Accrued Expenses 101,465 119,685 Total Current Liabilities 222,945 282,502 Long-term Liabilities 128,102 113,307 Other Liabilities 125,874 114,166 Total Liabilities 476,921 509,975 EQUITY Common Stock 289 289 Paid-in-Capital 37,776 37,422 Retained Earnings 531,695 611,075 Less: Treasury (253,272) (282,876) Total Equity 316,488 365,910 Total Liabilities and Equity 793,409 875,885 Calculate the following financial Ratios for 2012 Current Ratio 5 times Average Collection period 75days Accounts Receivables turnover 87times/year Inventory turnover 79times/year Operating Income Return on Investment 8% Operating Profit Margin 3% Total Asset Turn over 18times Debt Ratio 58% Times Interest earned 93times 2. What are 4 limitations of ratio analysis 3. What are the 4 questions asked in Ratio Analysis? 5. What are the two ways Financial Ratios are used to make meaningful comparisons 6. Name a ratio that is both a Liquidity and a Operating Profitability ratio

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 42P

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Statement of Financial Position ($ in thousands)			Statement of Comprehensive Income ($ in thousands)
	2011	2012			2011	2012
ASSETS				Sales	1,327,610	1,501,726
Cash	84,527	60,806		Less Cost of Sales	1,025,425)	(1,147,025)
Accounts Receivables	136,629	194,096		Gross Profit	302,185	354,701
Inventories	107,876	137,448		Less Selling, general and administrative expense	(129,986)	(125,219)
Prepaid Expenses	21,727	32,413		Less Depreciation	(47,511)	(49,346)
Other Current assets	31,287	34,383		Operating Profit	124,688	180,136
Total Current Assets	382,046	459,146		Less Interest Expense	(19,352)	(17,024)
Gross Property, Plant and equipment	812,428	874,301		Non-Operating Income	7,809	6,659
Accumulated Depreciation	(420,501)	(469,847)		Income before taxes	113,145	169,771
Net Property, Plant and equipment	391,927	404,454		Provision for Income Taxes	(42,500)	(63,670)
Investments	-	2,730		Net Income	70,645	106,101
Other Assets	19,436	9,555
Total Assets	793,409	875,885		Reconciliation of Retained Earnings ($ in thousands)
LIABILITIES				Retained earnings, December 2011	531,695
Short-term Notes	15,000	15,000		2012 Net Income		106,101
Notes Payables	19,036	18,159		dividends paid		26,912
Account Payable	76,915	117,757		Other gains		191
Taxes Payable	10,529	11,901		Retained earnings, December 2012	611,075
Accrued Expenses	101,465	119,685
Total Current Liabilities	222,945	282,502
Long-term Liabilities	128,102	113,307
Other Liabilities	125,874	114,166
Total Liabilities	476,921	509,975
EQUITY
Common Stock	289	289
Paid-in-Capital	37,776	37,422
Retained Earnings	531,695	611,075
Less: Treasury	(253,272)	(282,876)
Total Equity	316,488	365,910
Total Liabilities and Equity	793,409	875,885

Calculate the following financial Ratios for 2012

Current Ratio 5 times
Average Collection period 75days
Accounts Receivables turnover 87times/year
Inventory turnover 79times/year
Operating Income Return on Investment 8%
Operating Profit Margin 3%
Total Asset Turn over 18times
Debt Ratio 58%
Times Interest earned 93times

2. What are 4 limitations of ratio analysis

3. What are the 4 questions asked in Ratio Analysis?

5. What are the two ways Financial Ratios are used to make meaningful comparisons

6. Name a ratio that is both a Liquidity and a Operating Profitability ratio

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