Griffin Company Statement of Financial Position 12/31/12 12/31/11 Assets Cash $ 40,000 $ 10,000 Acco

Griffin Company

Statement of Financial Position

12/31/12 12/31/11

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Assets

Cash $ 40,000 $ 10,000

Accounts Receivable $ 30,000 $ 55,000

Inventory $110,000 $ 70,000

Property, plant and equipment $250,000 $257,000

Total Assets $430,000 $392,000

Liabilities and Stockholder’s Equity

Current liabilities $ 60,000 $ 50,000

5% morgage payable $120,000 $162,000

Common stock (30,000 shares) $150,000 $150,000

Retained earnings $100,000 $ 30,000

Total Liabilities and stockholders’ equity $430,000 $392,000

Griffin Company

Income Statement For the Year Ended December 31, 2012

Sales on account $420,000

Less expenses:

Cost of goods sold $214,000

Salary expense $ 50,000

Depreciation expnese $ 7,000

Interest expense $ 9,000

Total expenses $280,000

Income before taxes $140,000

Income tax expense (50%) $ 70,000

Net income $ 70,000

Compute the following rations for the Griffin Company for the year ending December 31, 2012:

A Profit margin ration (before interest and taxes)

B Total asset turnover

C Rate of return on total assets

D Rate of return on common stockholders’ equity

E Earnings per share of stock

F Inventory turnover

G Current ratio

H Quick ratio

I Accounts receivable turnover

J Debt-to-equity ratio

K Times interest earned

In addition to calculating and provided answers letters A through K, answer the following questions:

1) What conclusions can you draw regarding this company’s performance?;

2) Do you believe you have enough information to make a thorough analysis? Take into considerations the benefits of trend analysis

 

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