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P15-6 The comparative statements of Dillon Company are presented

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P15-6 The comparative statements of Dillon Company are presented below.
740 Chapter 15 Financial Statement Analysis
DILLON COMPANY
Balance Sheets
December 31
Assets 2009 2008
Current assets
Cash $ 21,000 $ 18,000
Short-term investments 18,000 15,000
Accounts receivable (net) 86,000 74,000
Inventory 90,000 70,000
Total current assets 215,000 177,000
Plant assets (net) 423,000 383,000
Total assets $638,000 $560,000
Compute numerous ratios.
(SO 5)
Additional data:
The common stock recently sold at $19.50 per share.
The year-end balance in the allowance for doubtful accounts was $3,000 for 2009 and $2,400 for
2008.
Instructions
Compute the following ratios for 2009.
(a) Current. (h) Return on common stockholders’ equity.
(b) Acid-test. (i) Earnings per share.
(c) Receivables turnover. (j) Price-earnings.
(d) Inventory turnover. (k) Payout.
(e) Profit margin. (l) Debt to total assets.
(f) Asset turnover. (m) Times interest earned.
(g) Return on assets.

 

 

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Customer: replied 6 years ago.
P15-6 The comparative statements of Dillon Company are presented below.

DILLON COMPANY
Income Statement
For Year Ended December 31
2009 2008
Net sales (all on account) $600,000 $520,000
Expenses
Cost of goods sold 415,000 354,000
Selling and administrative 120,800 114,800
Interest expense 7,800 6,000
Income tax expense 18,000 14,000
Total expenses 561,600 488,800
Net income $ 38,400 $ 31,200
Beginning-of-Year Balances
Total assets $31,416 $105,405
Total stockholders’ equity 11,132 43,623
Current liabilities 8,314 40,364
Total liabilities 20,284 61,782
Other Data
Average net receivables $4,845 $ 1,485
Average inventory 4,958 28,030
Net cash provided by operating activities 3,821 15,044
Instructions
(a) For each company, compute the following ratios.
(1) Current. (7) Asset turnover.
(2) Receivables turnover. (8) Return on assets.
(3) Average collection period. (9) Return on common stockholders’ equity.
(4) Inventory turnover. (10) Debt to total assets.
(5) Days in inventory. (11) Times interest earned.
(6) Profit margin.
(b) Compare the liquidity, solvency, and profitability of the two companies.
P15-6 The comparative statements of Dillon Company are presented below.
740 Chapter 15 Financial Statement Analysis
DILLON COMPANY
Balance Sheets
December 31
Assets 2009 2008
Current assets
Cash $ 21,000 $ 18,000
Short-term investments 18,000 15,000
Accounts receivable (net) 86,000 74,000
Inventory 90,000 70,000
Total current assets 215,000 177,000
Plant assets (net) 423,000 383,000
Total assets $638,000 $560,000
Compute numerous ratios.
(SO 5)
Additional data:
The common stock recently sold at $19.50 per share.
The year-end balance in the allowance for doubtful accounts was $3,000 for 2009 and $2,400 for
2008.
Instructions
Compute the following ratios for 2009.
(a) Current. (h) Return on common stockholders’ equity.
(b) Acid-test. (i) Earnings per share.
(c) Receivables turnover. (j) Price-earnings.
(d) Inventory turnover. (k) Payout.
(e) Profit margin. (l) Debt to total assets.
(f) Asset turnover. (m) Times interest earned.
(g) Return on assets.
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