Lizzie’s Clothing Barn, Inc. Statement of Financial Position December 31, 20X4 C
ID: 2568976 • Letter: L
Question
Lizzie’s Clothing Barn, Inc.
Statement of Financial Position
December 31, 20X4
Current assets Current liabilities
Cash………………………….. $1,000,000 Accounts payable……. $5,500,000
Accounts receivable (net)……. 3,200,000 Salaries payable……..… 800,000
Marketable securities………… 600,000 Dividends payable…..… 300,000
Inventory……………………... 3,500,000 Interest payable……...… 250,000
Prepaid rent…………………... 600,000 Income tax payable…..... 220,000
Prepaid insurance…………….. 100,000 Total current liabilities…. 7,070,000
Total current assets…………… 9,000,000 Long term debt
Property & equipment Note payable…………. 2,300,000
Building (net)………………… 3,900,000 Mortgage payable……. 1,400,000
Equipment (net)……………… 6,200,000 Total long-term debt…... 3,700,000
Total property & equipment…... ,100,000 Total liabilities………………………... $10,770,000
Other assets Stockholders’ equity
Investments…………………... 1,500,000 Common stock………… 6,000,000
Goodwill………………………. 700,000 Retained earnings…….. 4,530,000
Total other assets………………. 2,200,000 Total stockholders’ equity………….. 10,530,000
Total assets……………………. $21,300,000 Total liabilities & stockholders’ equity $21,300,000
Lizzie’s Clothing Barn, Inc.
Income Statement
For the Year Ended December 31, 20X4
Sales………………………………………………………..…………………… $27,000,000
Cost of goods sold……………………………………………………………... 12,000,000
Gross profit……………………………………………………………………… 15,000,000
Operating expenses:
General and administrative expenses……………………… $4,100,000
Selling expenses……………………………………………… 6,200,000
Total operating expenses……………………………………………………… 10,300,000
Operating income………………………………………………………………. 4,700,000
Nonoperating items:
Interest revenue……………………………………………….. (40,000)
Interest expense………………………………………………. 222,000
Nonoperating expense (net)…………………………………………………… 182,000
Income before taxes……………………………………………………………. 4,518,000
Income tax expense…………………………………………………………….. 1,807,000
Net income……………………………………………………………………….. $2,711,000
(See additional financial information on next page.)
Additional financial information:
· 600,000 weighted average number of common shares were issued and outstanding throughout 20X4.
· The accounts receivable balance (net of uncollectible accounts) on December 31, 20X3 was $2,500,000. All sale are credit sales.
· The inventory balance on December 31, 20X3 was $4,000,000.
· $1,500,000 in total dividends were declared in 20X4.
· Total stockholders’ equity on December 31, 20X3 was $9,516,000.
· Total assets on December 31, 20X3 were $19,625,000.
· The market price per share of common stock on December 31, 20X4 was $47.
· There was no preferred stock.
3. The gross profit percentage for 20X4 was:? The rate of return on average assets for 20X4 was:? The profit margin ratio for 20X4 was:? The asset turnover ratio for 20X4 was:? The rate of return on common shareholders’ equity for 20X4 was:? The earnings per share for 20X4 was:?
Explanation / Answer
1. Gross profit ratio = gross profit / net sales *100 = 15000,000 /27000,000 *100 = 55.56%
2. rate of return on average assets = Net income after tax/ average assets *100
Average assets = 19625,000+ 21300,000 /2 = 20462,500
rate of return on assets = 2711,000 / 20462,500 *100 = 13.25%
3. Profit margin ratio = Net profit after tax/ net sales *100 = 2711,000 /27000,000 *100 = 10.04%
4. Assets turnove rratio = net sales / average assets = 27000,000 /20462,500 = 1.32 times
5. Rate of return on common shareholders equity = Net income available for common shares/ Common stockholders equity *100
= 2711,000 / 10530,000*100 = 25.75%
6. Earnings per share = Net income after tax/ weighted average Number of common shares = 2711,000 /600,000 =4.52 per share
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