project 1

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PROJECT.docx

Using the following data (income statements and balance sheets)compute the following ratios for 2027, as well as both horizontal and vertical analysis AND comment on the meaning and importance of these ratios.

Additional data: All sales are on credit; Net cash provided by operations in 2027 was $220,000; capital expenditures $136,000 ; cash dividends paid $70,000.

A. Earnings per share (EPS)

m

Gross Profit Percentage

B. Return on stockholders' equity (ROE)

C. Return on assets (ROA)

D. Current Ratio (CR)

E. Accounts Receivable Turnover

F. Average Collection Period

G. Inventory Turnover

H. Days in Inventory

Solution

I. Times Interest Earned

J. Asset Turnover

K. Debt to Assets Ratio

L. Free Cash Flow

Jefferson Company

Income Statements

for the years ended December 31

 

2027

2026

Net Sales

$ 1,890,540

$ 1,750,500

Cost of Goods Sol.d

1,058,540

1,006,000

Gross Profit

832,000

744,500

Selling & Adm Expenses

500,000

479,000

Income from Operations

332,000

265,500

Interest Expenses

22,000

20,000

Income Before Income Tax

310,000

245,500

Income Tax Expense

92,000

73,000

Net Income

$ 218,000

 

$ 172,500

Jefferson Company

Balance Sheets

December 31

 

2027

2026

Assets

 

Current Assets:

 

Cash

60,100

64,200

S/T Investments

74,000

50,000

Accounts Receivable (net)

117,800

102,800

Inventory

126,000

115,500

Total Current Assets

377,900

332,500

Plant Assets (net)*

649,000

520,300

Total Assets

$ 1,026,900

$ 852,800

 

 

Liabilities & Equity

 

Current Liabilities

 

Accounts Payable

$ 160,000

$ 145,400

Income Taxes Payable

43,500

42,000

Total Current Liabilities

203,500

187,400

Bonds Payable

220,000

200,000

Total Liabilities

$ 423,500

$ 387,400

Stockholders' Equity

 

Common Stock ($5 par)

290,000

300,000

Retained Earnings

313,400

165,400

Total Stockholder Equity

603,400

465,400

Total Liabilities and Equity

$ 1,026,900

 

$ 852,800