Problem 13-4A The following financial information is for Frizell Company FRIZELL

Question

Problem 13-4A The following financial information is for Frizell Company FRIZELL COMPANY Balance Sheets December 31 2014 Assets Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land Building and equipment (net) Total assets Liabilities and Stockholders' Equit Notes payable Accounts payable Accrued liabilities Bonds payable, due 2017 Common stock, $10 par Retained earnings Total liabilities and stockholders' equity 2013 $ 69,70068,100 41,400 91,800 168,700 24,100 132,400 262,300184,800 $882,800 $711,300 52,100 105,100 235,600 25,600 132,400 $171,300 $101,800 53,100 39,600 170,100 206,300 149,200 140,400 882,800 $711,300 64,400 39,600 252,000 206,300 FRIZELL COMPANY Income Statements For the Years Ended December 31 2014 2013 Sales revenue Cost of goods sold Gross profit Operating expenses Net income $893,000 640,400 252,600 193,100 59,500 $783,500 575,400 208,100 159,700 48,400

Explanation / Answer

Answer: Liquidity 2014 2013 1 Current ratio = Current asset/Currect liabilities = Current asset/Currect liabilities =(69700+52100+105100+235600+25600)/(171300+64400+39600) =(68100+41400+91800+168700+24100)/(101800+53100+39600)                                 1.77 :1                            2.03 :1 2 Accounts receivables turnover =Net Sales/Average Accounts receivable =Net Sales/Average Accounts receivable =893000/(105100+91800) =783500/(91800+88600)                                 4.54 times                            4.34 times 3 Inventory turnover =Cost of goods sold/Average inventory =Cost of goods sold/Average inventory =640400/(235600+168700) =575400/(168700+116300)                                 1.58                            2.02 Profitability 4 Profit margin =Net profit/Sales =Net profit/Sales =59,500/893,000 =48400/783,500 6.66% 6.18% 5 Asset turnover =Net Sales/Average total asset =Net Sales/Average total asset =893000/((882800+711300)/2) =783500/((711300+633300)/2)                                 1.12                            1.17 6 Return on assets =Net income/Total asset =Net income/Total asset =59500/((882800+711300)/2) =48400/((711300+633300)/2) 7.47% 7.20% 7 Earning per share =Net Income/Number of sahares =Net Income/Number of sahares =59500/20630 =48400/20630 $                             2.88 $                        2.35

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