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iPad 2:29 PM * 60% edugen.wileyplus.com Bus 211 Final Review Questions WileyPLUS

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iPad 2:29 PM * 60% edugen.wileyplus.com Bus 211 Final Review Questions WileyPLUS Kimmel, Accounting, 4e CALCULATOR PRINTER VERSION BACK NE ASSIGNMENT RESOURCES Do It! Review 13-3 The condensed financial statements of Blondell Company for the years 2011 and 2012 are presented below BLONDELL COMPANY Balance Sheets December 31 (in thousands) 2012 2011 Current assets Cash and cash equivalents Accounts receivable (net) $330 534 576 $360 464 506 Brief Exercise 13-5 Prepaid expenses 130 60 160 1,570 410 74 Total current assets 1,490 380 74 530 510 $2,584 $2,454 $854 496 1,104 - 584-454 Property, plant, and equipment (net) Intangibles and other assets Total assets Current liabilities Long-term liabilities Stockholders' equity-common $884 596 Review Results by Study Objective 1,104 1104 Total liabilities and stockholders' equity BLONDELL COMPANY Income Statements For the Year Ended December 31 (in thousands)

Explanation / Answer

2012

2011

a) Current ratio

A. Current assets

$ 1,570,000

$ 1,490,000

B. Current liabilties

$ 884,000

$ 854,000

Current ratio (A/B)

1.78

1.74

b) Inventory turnover ratio

A. Cost of goods sold

$ 1,034,000

$ 954,000

B. Beginning Inventory

$ 506,000

$ 370,000

C. Ending Inventory

$ 576,000

$ 506,000

D. Average inventory (B+C)/2

$ 541,000

$ 438,000

Inventory turnover ratio (A/D)

1.91

2.18

c) Profit margin ratio

A. Net income

$ 283,000

$ 163,000

B. Revenues

$ 3,916,000

$ 3,576,000

Profit margin ratio (A/B)

7.23%

4.56%

d) Return on assets

A. Net income

$ 283,000

$ 163,000

B. Beginning total assets

$ 2,454,000

$ 1,930,000

C. Ending total assets

$ 2,584,000

$ 2,454,000

D. Average total assets (B+C)/2

$ 2,519,000

$ 2,192,000

Return on assets (A/D)

11.23%

7.44%

e) Return on common stockholder's equity

A. Net income

$ 283,000

$ 163,000

B. Beginning common stockholder's equity

$ 1,104,000

$ 990,000

C. Ending common stockholder's equity

$ 1,104,000

$ 1,104,000

D. Average common stockholder's equity (B+C)/2

$ 1,104,000

$ 1,047,000

Return on common stockholder's equity (A/D)

25.63%

15.57%

f) Debt to total assets ratio

A. Long term liabilities

$ 596,000

$ 496,000

B. Total assets

$ 2,584,000

$ 2,454,000

Debt to total assets ratio (A/B)

23.07%

20.21%

g) Times interest earned ratio

A.Income before income taxes

$ 472,000

$ 272,000

B. Interest expense

$ 10,000

$ 20,000

C.Income before interest and Income taxes (A+B)

$ 482,000

$ 292,000

Times interest earned ratio (C/B)

48.2

14.6

2012

2011

a) Current ratio

A. Current assets

$ 1,570,000

$ 1,490,000

B. Current liabilties

$ 884,000

$ 854,000

Current ratio (A/B)

1.78

1.74

b) Inventory turnover ratio

A. Cost of goods sold

$ 1,034,000

$ 954,000

B. Beginning Inventory

$ 506,000

$ 370,000

C. Ending Inventory

$ 576,000

$ 506,000

D. Average inventory (B+C)/2

$ 541,000

$ 438,000

Inventory turnover ratio (A/D)

1.91

2.18

c) Profit margin ratio

A. Net income

$ 283,000

$ 163,000

B. Revenues

$ 3,916,000

$ 3,576,000

Profit margin ratio (A/B)

7.23%

4.56%

d) Return on assets

A. Net income

$ 283,000

$ 163,000

B. Beginning total assets

$ 2,454,000

$ 1,930,000

C. Ending total assets

$ 2,584,000

$ 2,454,000

D. Average total assets (B+C)/2

$ 2,519,000

$ 2,192,000

Return on assets (A/D)

11.23%

7.44%

e) Return on common stockholder's equity

A. Net income

$ 283,000

$ 163,000

B. Beginning common stockholder's equity

$ 1,104,000

$ 990,000

C. Ending common stockholder's equity

$ 1,104,000

$ 1,104,000

D. Average common stockholder's equity (B+C)/2

$ 1,104,000

$ 1,047,000

Return on common stockholder's equity (A/D)

25.63%

15.57%

f) Debt to total assets ratio

A. Long term liabilities

$ 596,000

$ 496,000

B. Total assets

$ 2,584,000

$ 2,454,000

Debt to total assets ratio (A/B)

23.07%

20.21%

g) Times interest earned ratio

A.Income before income taxes

$ 472,000

$ 272,000

B. Interest expense

$ 10,000

$ 20,000

C.Income before interest and Income taxes (A+B)

$ 482,000

$ 292,000

Times interest earned ratio (C/B)

48.2

14.6