Practice Questions 3-11 - 2020
Practice Questions 3-11 - 2020
Practice Questions 3-11 - 2020
Use the following information to analyze the BJ Company. Calculate any profit measures
deemed necessary in order to discuss the profitability of the company .
BJ Company
Income Statements
For the Years Ended Dec. 31, 2014 and 2015
2014 2015
Net sales Rs.174,000 Rs.167,000
COGS 114,000 115,000
Gross profit 60,000 52,000
General and administrative expenses 54,000 46,000
Operating profit 6,000 6,000
Interest expense (1,000) (1,000)
Earnings before taxes 5,000 5,000
Income taxes 2,000 2,000
Net income 3,000 3,000
Practice Question 2:
Use the following selected financial data for Happy Valley Co. to answer questions.
Calculate (1)debt ratio (2) operating profit margin (3) return on equity (4) net profit
margin (5) Gross Profit ratio (6) Operating expense ratio (7) Assets turnover
Practice Question 3:
Use the following selected financial information for Cascabel Corporation to answer
questions
Cascabel Corporation
Balance Sheet
December 31, 2015
Assets Liabilities and stockholders' equity
Current assets Current liabilities
Cash 2 Accounts payable 36
Short-term investments 10 Accrued liabilities 25
Accounts receivable 52 Total current liabilities 61
Inventory 57
Other current assets 8 Long-term debt 102
Total current assets 129 Total liabilities 163
Cascabel Corporation
Income Statement
For the Year Ended December 31, 2015
Additional information: Market price of stock is Rs.25. Firm declared and paid
dividend 20% on par value of stock.
Compute following ratios:
Current ratio (2) Quick ratio (3)Debt ratio (4)Equity ratio (5)Inventory turnover in
days(use 360 days) (6) Receivable turnover in days(use 360 days) (7) Earnings per share
(8)Book value per share (9)Interest coverage ratio (10) Gross Profit ratio
Practice Question 4:
Belmont Industries
Balance Sheet
As at 31-Dec-01
Inventory Turnover 5
Practice Question 5:
Illinois Paper Products
Balance Sheet
As at 31-Dec-01
Inventory Turnover 9
sheet below:
SHANNON CORPORATION
BALANCE SHEET , 1999
The following data are from the U Guessed it Company’s financial statements. This company is a
manufacturer of board games for young adults. The market is fiercely competitive, therefore all
sales ($20 million) for the year 1983 were on credit. Given the following ratios, fill in the balance
sheet below:
U GUESSED IT CO.
BALANCE SHEET , 1983
Inventory Turnover 7
Rs.26,38
Total Assets 2 Total Rs.26,382
SMOLIRA GOLF CORP.
Income Statement as on
December 31, 2011
Sales Rs.28,000
Less: Cost of goods sold 11,600
Depreciation 2,140
Dividend Rs.4000
Addition to retained
Earnings 4,632
a. Current Ratio
b. Quick Ratio
c. Cash Ratio
Profitability Ratios:
k. Profit Margin
l. Return on Assets
m. Return on equity
Practice Question 8:
1. The December 31, 2015, balance sheet and income statement for Mayberry Cafeterias, Inc.
are given
a. Compute the specified ratios, and compare them to the industry average (better or
worse).
b. If you were appointed financial manager of the company, what decisions would you
make based on your findings?
Balance Sheet
Cash $ 17 Accounts Payable $7
Marketable Securities 5 Notes Payable 3
Accounts Receivable 3 Taxes Payable 2
Inventory 16 Other Accruals 3
Prepaid Expenses 6 Current Liabilities $ 15
Current Assets $ 47
Long-term debt $ 35
Gross plant and $ 126 Preferred Stock 10
equipment (57) Common Stock 20
Less: Accumulated Dep. 69 Capital contributed in excess
Net Plant and Equipment of par 10
Retained Earnings 26
Total Assets $ 116 Total Liabilities and $ 116
Stockholders’ equity
Income Statement
Net Sales $ 1,072
Cost of Goods sold 921
Gross Profit 152
Selling Expense 86
General and Administrative expense 26
Depreciation 6
Net Income $ 33
Interest Expense 4
Profit Before taxes $ 29
Taxes 12
Net Income
$ 17
2015 Better or Worse 2015 Industry Average
Ratios to Compute Mayberry (%)
Current 2.86
Quick 2.31
Debt-Equity 0.51