Accounting for Decision Making
Course: Accounting for Decision Making Operation: Financial Statement Analysis (files and titles are in the attachment) Complete the analysis on the attached financial statement. Format requir
Ampex Corporation, Comparative Balance Sheets, December 31, 2011, and 2012 (in thousands of dollars) Assets 2012 2011 Current assets: Cash $ 20 $ 30 Accounts receivable (net) 95 95 Inventory 130 110 Total current assets $ 245 $ 235 Fixed assets: Land $ 1 0 $ 10 Building and equipment (net) 120 100 Total fixed assets (net) $130 $110 Other assets : Goodwill and organization costs $ 10 $ 10 Total assets $385 $355 Liabilities and Stockholder’s Equity Current liabilities: Accounts payable $ 50 $ 40 Estimated inc ome taxes payable 10 10 Total current liabilities $ 60 $ 50 Fixed liabilities: Mortgage bonds, 10 percent $ 50 $ 50 Total liabilities $110 $100 Stockholders’ equity: Convertible preferred stock, 5 percent $ 20 $ 20 Common stock (10,000 shares outstanding) 50 50 Retained earnings 205 185 Total stockholders’ equity $275 $255 Total liabilities and stockholders’ equity $385 $355 Part B Ampex Corporation Condensed Income Statement, 2012 (in thousands of dollars) Gross sales $11,516 100.66% Less: Returns and allowances 10 0.66 Net sales $ 1,506 100.00% Less: Cost of goods sold 1,004 66.67 Gross profit $ 502 33.33% Operating expenses 400 26.56 Operating profit $ 102 6.77% Interest 5 0.33 % Profit before taxes 97 6.44% Income tax expense 47 3.12 Net income $ 50 3.32% Less: Preferred dividends 1 0.07 Common dividends 29 1.93 Change in retained earnings $ 20 1.32% Question # 1 : Provide an answer for the following ratios: (Hint : rem ember the state ment is in thousands, therefore “10 ” would be “10,000) Current ratio Acid Test ratio Times Interest earned ratio Debt to equity ratio Inventory turnover ratio Asset turnover ratio Gross margin ratio Profit margin ratio Question # 2: (a) Performing a ho rizontal analysis , with 2012 as the base year, on th e balance sheet , what is the percentage change for cash? (b) Performing a vertical analysis , with 2012 as the base year, what is the percentage change for total assets?