MNQ Company Balance Sheet ($000) 2008 2007 2006 2005 2004 Assets Current Assets
ID: 2673023 • Letter: M
Question
MNQ CompanyBalance Sheet ($000) 2008 2007 2006 2005 2004
Assets
Current Assets
Cash and cash equivalents $250 $225 $191 $160 $192
Accounts receivable $650 $585 $497 $425 $510
Inventories $300 $270 $230 $200 $240
Total Current Assets $1,200 $1,080 $918 $785 $942
Fixed Assets
Property, plant, and equipment $2,200 $1,870 $1,814 $1,422 $1,400
Less: Accumulated depreciation $400 $200 $180 $80 $75
Net property, plant, and equipment $1,800 $1,670 $1,634 $1,342 $1,325
Intangible assets $300 $240 $220 $210 $205
Total Fixed Assets $2,100 $1,910 $1,854 $1,552 $1,530
Total Assets $3,300 $2,990 $2,772 $2,337 $2,472
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $400 $340 $299 $245 $319
Notes payable $300 $255 $224 $184 $239
Accrued expenses $600 $510 $449 $368 $478
Total Current Liabilities $1,300 $1,105 $972 $797 $1,037
Long-Term Liabilities
Long-term debt $400 $380 $370 $350 $345
Deferred taxes $250 $230 $220 $210 $205
Total Long-Term Liabilities $650 $610 $590 $560 $550
Total Liabilities $1,950 $1,715 $1,562 $1,357 $1,587
Stockholders' Equity
Common stock $100 $100 $100 $100 $100
Capital surplus $450 $420 $410 $380 $370
Retained earnings $800 $755 $700 $500 $415
Total Stockholders' Equity $1,350 $1,275 $1,210 $980 $885
Total Liabilities and Stockholders' Equity $3,300 $2,990 $2,772 $2,337 $2,472
For each of the five years of the provided financial statements, calculate and analyze SMM Company's below financial ratios:
Return on assets
Return on equity
Price-earnings ratio
Market-to-book ratio
Explanation / Answer
Return on Assets is a ratio between net income and total assets employed 2008 2007 2006 2005 2004 800/3300=24% 755/2990=25% 700/2772=25% 500/2337=21% 415/2472=17% Analysis: From 2004 it is increasing but growth stopped from 2006. It was stagnant in 2007 and decreased by 100 basis points in 2008. Return on equity: Ration between net income and shareholders equity 2008 2007 2006 2005 2004 800/1350=59% 755/1275=59% 700/1250=56% 500/980=51% 415/885=47% Analysis: The growth trend continued from 2004 to 2007 but stagnated in 2008 at 59%. There is no specific information on number of shares and market price of each share to arrive at the following ratios: Price-earnings ratio: Ratio between market price of share and earning per share. Market to book ratio is the ratio of current share price to book value per share. It shows present worth of the company
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