ACC 280 Week 5 Team Assignment – Chapter 15 Problems

P15-1

Comparative statement data for Douglas Company and Maulder Company, two competitors, appear below. All balance sheet data are as of December 31, 2009, and December 31, 2008.

	Douglas Company		Maulder Company
	2009	2008	2009	2008
Net sales	$1,549,035		$339,038
Cost of goods sold	1,080,490		241,000
Operating expenses	302,275		79,000
Interest expense	8,980		2,252
Income tax expense	54,500		6,650
Current assets	325,975	$312,410	83,336	$79,467
Plant assets (net)	521,310	500,000	139,728	125,812
Current liabilities	65,325	75,815	35,348	30,281
Long-term liabilities	108,500	90,000	29,620	25,000
Common stock, $10 par	500,000	500,000	120,000	120,000
Retained earnings	173,460	146,595	38,096	29,998

Instructions

Prepare a vertical analysis of the 2009 income statement data for Douglas Company and Maulder Company in columnar form.
Comment on the relative profitability of the companies by computing the return on assets and the return on common stockholders’ equity ratios for both companies.

P15-6

The comparative statements of Dillon Company are presented below.

DILLON COMPANY

Income Statement

For Year Ended December 31

			2009	2008
Net sales (all on account)			$600,000	$520,000
Expenses
	Cost of goods sold		415,000	354,000
	Selling and administrative		120,800	114,800
	Interest expense		7,800	6,000
	Income tax expense		18,000	$14,000
		Total expenses	561,600	488,800
Net income			38,400	31,200

DILLON COMPANY

Balance Sheets

December 31

Assets			2009	2008
Current assets
	Cash		$ 21,000	$ 18,000
	Short-term investments		18,000	15,000
	Accounts receivable (net)		86,000	74,000
	Inventory		90,000	70,000
		Total current assets	215,000	$177,000
Plant assets (net)			423,000	383,000
Total assets			638,000	560,000

Liabilities and Stockholders’ Equity
Current liabilities
	Accounts payable		$ 122,000	$ 110,000
	Income taxes payable		23,000	20,000
		Total current liabilities	145,000	130,000
Long-term liabilities
	Bonds payable		120,000	80,000
		Total liabilities	265,000	210,000
Stockholders’ equit
	Common stock ($5 par)		150,000	150,000
	Retained earnings		223,000	200,000
		Total stockholders’ equity	373,000	350,000
Total liabilities and stockholders’ equity			$ 638,000	$ 560,000

Additional data:

The common stock recently sold at $19.50 per share.

The year-end balance in the allowance for doubtful accounts was $3,000 for 2009 and $2,400 for 2008.

Instructions

Compute the following ratios for 2009.

Acid-test.
Receivables turnover.
Inventory turnover.
Profit margin.
Asset turnover.
Return on assets.
Return on common stockholders’ equity.
Earnings per share.
Price-earnings.
Debt to total assets.
Times interest earned.

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