Problem 4 Test 2 Triumph Industries Inc comparative financial statements for the
ID: 2561553 • Letter: P
Question
Problem 4 Test 2 Triumph Industries Inc comparative financial statements for the years ending December 31, 2010 and 2009 are as follows. The market price for Triump Industries common stock was $ 20 on December 31, 2009, and $ 32 on December 31, 2010. Common stock shares outstanding for both 2010 and 2009 are 70000 shares (le S 700,000 $ 10 par). A) Perform vertical analysis on the income statement and the balance statement. B) Determine the ratios shown below C) Compare and comment on Triumph's financial ratios with the industry Triump Industries Comparative Income Statement For the Years Ended December 31, 2010 and 2009 2010 2009 7,000,000 325 $6,675,000 $5,670,000 Sales Sales returns and allowances Net Sales Cost of Goods Sold Gross Profit Selling Expenses Administrative Expenses Total Operating Expenses Income From Operations Other Income Earnings before Interest & taxes (EBIT Other Expenses (interest) Income Before Income Tax Income Tax Expense Net Income $175,000 $5,495,000 950 825 $780,000 $464,000 485 465 $658,000 $19,200 $677,200 $64,000 $613,200 $360,000 $385,000 $280,000 35 $245,000 $437,200 Triumph Industries Comparative Retained Earnings Statement For the Years Ended December 31, 2010 and 2009 2010 2009 Retained Earnings, Januray 1 Add Net Income for year Total Deduct dividends 723,000 245 968,000 355,800 437 793,000 Preferred Stock Common Stock Total 40,000 45,000 85,000 40,000 30,000 70,000 723,000 Retained Earnings, December 31 Triump Industries Comparative Balance Statement December 31, 2010 and 2009 12-31-2010 12-31-2009Explanation / Answer
The following table shows the calculated ratios:
Ratios
Amounts in $
Industry average
Working capital:
1.83
NA
Current assets
17,40,000.00
Current liabilities
9,50,000.00
Current ratio:
1.83
2.20
Current assets
17,40,000.00
Current liabilities
9,50,000.00
Quick ratio:
0.84
0.80
Current assets-inventory
8,00,000.00
Current liabilities
9,50,000.00
Accounts receivables turnover ratio:
14.74
16.00
Credit sales
70,00,000.00
Average receivables
4,75,000.00
Number of days sales in receivables:
24.77
22.20
365.00
365.00
Accounts receivables turnover ratio
14.74
Inventory turnover:
6.38
5.00
Cost of goods sold
48,50,000.00
Average inventory
7,60,000.00
Number of days sale in inventory:
57.20
75.00
365.00
365.00
Inventory turnover
6.38
Ratio of fixed assets to long term liabilities:
1.57
2.00
Fixed assets
25,25,000.00
Long term liabilities
16,10,000.00
Ratio of liabilities to stockholders equity:
1.36
0.70
Liabilities
25,60,000.00
Stockholders’ equity
18,83,000.00
Number of times interest charged are earned:
3.67
8.50
EBIT
3,85,000.00
Interest charges
1,05,000.00
Number of times preferred dividends are earned:
16.04
7.10
EBIT
3,85,000.00
Preferred dividend
24,000.00
Ratio of net sales to assets:
1.58
2.10
Net sales
70,00,000.00
Assets
44,30,000.00
Rate earned on total assets:
0.06
8.50
Net income
2,45,000.00
Total assets
44,30,000.00
Rate earned on stockholders equity:
0.13
12.00
Net income
2,45,000.00
Stockholders’ equity
18,83,000.00
Rate earned on common stockholders’ equity:
0.35
14.20
Net income
2,45,000.00
Common stockholders’ equity
7,00,000.00
Earnings per share:
3.50
3.65
Net income
2,45,000.00
Number of shares outstanding
70,000.00
Price-earnings ratio:
9.14
9.20
Market price
32.00
Earnings per share
3.50
Dividend per share:
3.50
0.80
Net income
2,45,000.00
Number of shares outstanding
70,000.00
Dividend yield:
0.11
2.50
Dividend
3.50
Market price
32.00
From the above table, it can be stated that:
Ratios
Amounts in $
Industry average
Working capital:
1.83
NA
Current assets
17,40,000.00
Current liabilities
9,50,000.00
Current ratio:
1.83
2.20
Current assets
17,40,000.00
Current liabilities
9,50,000.00
Quick ratio:
0.84
0.80
Current assets-inventory
8,00,000.00
Current liabilities
9,50,000.00
Accounts receivables turnover ratio:
14.74
16.00
Credit sales
70,00,000.00
Average receivables
4,75,000.00
Number of days sales in receivables:
24.77
22.20
365.00
365.00
Accounts receivables turnover ratio
14.74
Inventory turnover:
6.38
5.00
Cost of goods sold
48,50,000.00
Average inventory
7,60,000.00
Number of days sale in inventory:
57.20
75.00
365.00
365.00
Inventory turnover
6.38
Ratio of fixed assets to long term liabilities:
1.57
2.00
Fixed assets
25,25,000.00
Long term liabilities
16,10,000.00
Ratio of liabilities to stockholders equity:
1.36
0.70
Liabilities
25,60,000.00
Stockholders’ equity
18,83,000.00
Number of times interest charged are earned:
3.67
8.50
EBIT
3,85,000.00
Interest charges
1,05,000.00
Number of times preferred dividends are earned:
16.04
7.10
EBIT
3,85,000.00
Preferred dividend
24,000.00
Ratio of net sales to assets:
1.58
2.10
Net sales
70,00,000.00
Assets
44,30,000.00
Rate earned on total assets:
0.06
8.50
Net income
2,45,000.00
Total assets
44,30,000.00
Rate earned on stockholders equity:
0.13
12.00
Net income
2,45,000.00
Stockholders’ equity
18,83,000.00
Rate earned on common stockholders’ equity:
0.35
14.20
Net income
2,45,000.00
Common stockholders’ equity
7,00,000.00
Earnings per share:
3.50
3.65
Net income
2,45,000.00
Number of shares outstanding
70,000.00
Price-earnings ratio:
9.14
9.20
Market price
32.00
Earnings per share
3.50
Dividend per share:
3.50
0.80
Net income
2,45,000.00
Number of shares outstanding
70,000.00
Dividend yield:
0.11
2.50
Dividend
3.50
Market price
32.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.