the current year financial statements for Blue Water Company and Prime Fish Comp
ID: 2574766 • Letter: T
Question
the current year financial statements for Blue Water Company and Prime Fish Company are presented below.
Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blue Water is more conservative, and as its president has said, “We avoid what we consider to be undue risk.” Neither company is publicly held.
Required:
1. Complete a schedule that reflects a ratio analysis of each company. (Round your intermediate calculations and final answers to 2 decimal places. Enter percentage answers rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).)
Blue Water Prime Fish Balance sheet: Cash $ 42,100 $ 19,900 Accounts receivable (net) 43,500 34,300 Inventory 93,500 46,600 Property & equipment (net) 156,500 414,200 Other assets 85,100 316,000 Total assets $ 420,700 $ 831,000 Current liabilities $ 93,500 $ 65,500 Long-term debt (interest rate: 15%) 72,700 62,200 Capital stock ($10 par value) 155,700 523,000 Additional paid-in capital 30,100 107,100 Retained earnings 68,700 73,200 Total liabilities and stockholders’ equity $ 420,700 $ 831,000 Income statement: Sales revenue (1/2 on credit) $ 430,500 $ 791,000 Cost of goods sold (235,500 ) (401,100 ) Operating expenses (163,200 ) (312,100 ) Net income $ 31,800 $ 77,800 Other data: Per share stock price at end of current year $ 23.1 $ 26 Average income tax rate 45 % 45 % Dividends declared and paid in current year $ 34,100 $ 153,500 and slockhaldens squay 5 34 10 163S Requiree daeimal places 0.1224 should bè entered as 12A41.)Explanation / Answer
1) Return on Equity=Net Income/Capital Stock+Additional Paid in Capital+Retianed Earnings Blue Water Company Prime Fish Company Net Income $ 31,800.00 $ 77,800.00 Capital Stock $ 155,700.00 $ 523,000.00 Additional Paid in Capital $ 30,100.00 $ 107,100.00 Retained Earnings $ 68,700.00 $ 73,200.00 Equity $ 254,500.00 $ 703,300.00 Return on Equity= ($31800/$254500)=12.5% ($77800/$703300)=11.06% 2) Return on Assets=NetIncome/Total Assets Blue Water Company Prime Fish Company Net Income $ 31,800.00 $ 77,800.00 Total Assets $ 420,700.00 $ 831,000.00 Return on Assets= (31800/420700)=7.56% (77800/831000)=9.36% 4) Net Profit Margin=(Net Income/Sales)*100 Blue Water Company Prime Fish Company Net Income $ 31,800.00 $ 77,800.00 Sales $ 430,500.00 $ 791,000.00 Net Profit Margin= (31800/430500)*100=7.39% (77800/791000)*100=9.84% 5) Earning Per Share=Net Income/Number of shares outstanding Blue Water Company Prime Fish Company Net Income $ 31,800.00 $ 77,800.00 Number of shares outstanding $ 15,570.00 $ 52,300.00 EPS= ($31800/15570)=2.04 ($77800/52300)=1.49 6) Total Assets Turnover=Sales/Total Assets Blue Water Company Prime Fish Company Sales $ 430,500.00 $ 791,000.00 Total Assets $ 420,700.00 $ 831,000.00 Total Assets Turnover= ($430500/$420700)=1.02 ($791000/$831000)=.95 7) Fixed Assets Turnover=Sales/Fixed Assets Blue Water Company Prime Fish Company Sales $ 430,500.00 $ 791,000.00 Fixed Assets $ 156,500.00 $ 414,200.00 Fixed Assets Turnover ($430500/$156500)=2.75 ($791000/$414200)=1.91 8) Receivable Turnover= Credit Sales/Accounts Receivable Blue Water Company Prime Fish Company Credit Sales $ 215,250.00 $ 395,500.00 Accounts Receivable $ 43,500.00 $ 34,300.00 Receivable Turnover (215250/43500)=4.95 (395500/34300)=11.53 9) Inventory Turnover=Cost of goods sold/Inventory Blue Water Company Prime Fish Company Cost of goods sold $ 235,500.00 $ 401,100.00 Inventory $ 93,500.00 $ 46,600.00 Inventory Turnover ($235500/$93500)=2.52 ($401100/$46600)=8.61 10) Current Ratio=Current Assets/Current Liabilities Blue Water Company Prime Fish Company Current Assets Cash $ 42,100.00 $ 19,900.00 Accounts Receivable(net) $ 43,500.00 $ 34,300.00 Inventory $ 93,500.00 $ 46,600.00 Total Current Assets $ 179,100.00 $ 100,800.00 Current Liabilities $ 93,500.00 $ 65,500.00 Current Ratio ($179100/$93500)=1.92:1 ($100800/$65500)=1.54:1 11) Quick Ratio=Quik Assets/Current Liabilites Quick Assets Cash $ 42,100.00 $ 19,900.00 Accounts Receivable $ 43,500.00 $ 34,300.00 Total Quick Assets $ 85,600.00 $ 54,200.00 Current Liabilities $ 93,500.00 $ 65,500.00 Quick Ratio= ($85600/$93500)=.92 ($54200/$65500)=.83 12) Cash Ratio=Cash and cash equivalents/Current Liabilites Cash $ 42,100.00 $ 19,900.00 Current Liabilites $ 93,500.00 $ 65,500.00 Cash Ratio ($42100/$93500)=.45 ($19900/$65500)=.30 13) Debt Equity Ratio=Debt/Equity Total Liabilities $ 166,200.00 $ 127,700.00 Capital Stock $ 155,700.00 $ 523,000.00 Additional Paid in Capital $ 30,100.00 $ 107,100.00 Retained Earnings $ 68,700.00 $ 73,200.00 Equity $ 254,500.00 $ 703,300.00 Debt Equity Ratio= ($166200/$254500)=.65 ($127700/$703300)=.18 14) Price Earnings Ratio=Market Price Per Share/EPS EPS= $ 2.04 $ 1.49 Market Price Per Share $ 23.10 $ 26.00 Price Earnings Ratio (23.1/2.04)=11.32 (26/1.49)=17.44 15) Dividend Yield Ratio=(Dividend Per Share/Market Price Per share)*100 Dividend Per Share= (34100/15570)=2.19 (153500/52300)=2.93 Market Price Per Share= $ 23.10 $ 26.00 Dividend Yield Ratio (2.19/23.1)=9.48% (2.93/26)=11.26%
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