Question 4 MESSERSMITH COMPANY Balance Sheets December 31 Assets 2017 2016 Liabi
ID: 2727874 • Letter: Q
Question
Question 4
MESSERSMITH COMPANY
Balance Sheets
December 31
Assets
2017
2016
Liabilities and Stockholders’ Equity
MESSERSMITH COMPANY
Income Statement
For the Years Ended December 31
2017
2016
(a)
2016
2017
Change
LIQUIDITY
PROFITABILITY
LINK TO TEXT
Question 4
Financial information for Messersmith Company is presented below.MESSERSMITH COMPANY
Balance Sheets
December 31
Assets
2017
2016
Cash $ 119,700 $ 111,150 Short-term investments 88,920 68,400 Accounts receivable (net) 167,580 136,800 Inventory 213,750 230,850 Prepaid expenses 49,590 39,330 Land 222,300 222,300 Building and equipment (net) 307,800 299,250 $1,169,640 $1,108,080Liabilities and Stockholders’ Equity
Notes payable $171,000 $171,000 Accounts payable 82,080 71,820 Accrued liabilities 85,500 68,400 Bonds payable, due 2020 256,500 256,500 Common stock, $10 par 342,000 342,000 Retained earnings 232,560 198,360 $1,169,640 $1,108,080MESSERSMITH COMPANY
Income Statement
For the Years Ended December 31
2017
2016
Net sales $1,453,500 $1,350,900 Cost of goods sold 1,060,200 983,250 Gross profit 393,300 367,650 Operating expenses 319,770 295,830 Net income $ 73,530 $ 71,820Additional information:
1. Inventory at the beginning of 2016 was $201,780. 2. Total assets at the beginning of 2016 were $1,077,300. 3. No common stock transactions occurred during 2016 or 2017. 4. All sales were on account. Accounts receivable, net at the beginning of 2016 were $150,480. 5. Notes payable are classified as current liabilities.
Explanation / Answer
Ratio analysis 2017 current ratio currentassets / current liability 519840 $338,580 1.535354 increase 2016 current ratio currentassets / current liability 475380 $311,220 1.527473 acid test ratio 2017 acid test ratio quick assets/current liabilities 256500 $338,580 0.757576 increase 2016 acid test ratio quick assets/current liabilities 205200 $311,220 0.659341 accounts receivables turnover sales / average accounts receivables sales / average accounts receivables 2017 1453500 152190 9.550562 increase 2016 1350900 143640 9.404762 INVENTORY TURNOVER RATIO SALES/ AVERAGE INVENTORY 2017 1453500 222300 6.538462 increase 2016 1350900 216265 6.246503 Profit margin net income /sales 2017 73530 1453500 5.06% decrease 2016 71820 1350900 5.32% asset turnover net sales/total average assets 2017 1453500 1138860 1.276276 increase 2016 1350900 1092690 1.236307 return on assets net income/average assets 2017 73530 1138860 6.46% decrease 2016 71820 1092690 6.57% earning per share net income/no of shares 2017 73530 34200 2.15 increase 2016 71820 34200 2.1
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