Week #16 – Chapter 12 Homework Assignment Problem 1 (Textbook Reference: P12-3) – Compute working capital, current ratio, and acid-test ratio The following data are for Toy Company: Required: a. Compute the amount of working capital at both year-end dat

Week #16 – Chapter 12 Homework Assignment Problem 1 (Textbook Reference: P12-3) – Compute working capital, current ratio, and acid-test ratio The following data are for Toy Company: 

2013 2012 Allowance for uncollectible accounts 72,000 $      57,000 $      Prepaid expenses 34,500 $      45,000 $      Accrued liabilities 210,000 $    186,000 $    Casn in Bank A 1,095,000 $ 975,000 $    Wages payable $            37,500 $      Accounts payable 714,000 $    585,000 $    Merchandise inventory 1,342,500 $ 1,437,000 $ Bonds payable, due in 2015 615,000 $    594,000 $    Marketable securities 217,500 $    147,000 $    Notes payable (due in six months) 300,000 $    195,000 $    Accounts receivable 907,500 $    870,000 $    Cash flow from operating activities 192,000 $    180,000

Required: a. Compute the amount of working capital at both year-end dates. 
• 2013: _______________________________________
• 2012: _______________________________________ b. Compute the current ratio at both year-end dates. Round your answers two decimal places. • 2013: _______________________________________
• 2012: _______________________________________ c. Compute the acid-test ratio at both year-end dates. Round your answers two decimal places.
• 2013: _______________________________________
• 2012: _______________________________________ d. Compute the cash flow liquidity ratio at both year-end dates. Round your answers two decimal places. 
• 2013: _______________________________________
• 2012: _______________________________________
 
2013 2012 Allowance for uncollectible accounts 72,000 $      57,000 $      Prepaid expenses 34,500 $      45,000 $      Accrued liabilities 210,000 $    186,000 $    Casn in Bank A 1,095,000 $ 975,000 $    Wages payable $            37,500 $      Accounts payable 714,000 $    585,000 $    Merchandise inventory 1,342,500 $ 1,437,000 $ Bonds payable, due in 2015 615,000 $    594,000 $    Marketable securities 217,500 $    147,000 $    Notes payable (due in six months) 300,000 $    195,000 $    Accounts receivable 907,500 $    870,000 $    Cash flow from operating activities 192,000 $    180,000 $    December 31
Problem 2 (Textbook Reference: P12-6) – Compute EPS, rate of return on stockholders’ equity, and number of times interest earned for two years Amazon.com, Inc. is a multinational E-commerce company that earns revenues from the sale of books, e-books, music, software, electronics, and other consumer goods. The following information is taken from the 2011 annual report from Amazon.com:  
Required: Compute the following for both 2011 and 2010. Then compare and comment. a. EPS of common stock. Round your answers two decimal places.
• 2011: ____________________________________________
• 2010: ____________________________________________ b. Net income to net sales. Round your answers two decimal places.
• 2011: ____________________________________________
• 2010: ____________________________________________ c. Net income to average common stockholders’ equity. Round your answers two decimal places. • 2011: ____________________________________________
• 2010: ____________________________________________ d. Times interest earned ratio. Round your answers two decimal places.
• 2011: ____________________________________________ • 2010: ____________________________________________  
(in millions) 2011 2010 Net sales 48,077 $ 34,204 $ Income before interest and taxes 1,042 $   1,563 $   Net income 631 $      1,152 $   Interest expense 108 $      66 $        Stockholders' equity (on December 31, 2009, $5,257) 7,757 $   6,864 $   Common stock, par value $0.01, December 31 5 $          5 $         
Problem 3 (Textbook Reference: P12-7A) – Compute numerous standard ratios Parametric Technology Corporation is in the CAD/CAM/CAE industry and is the top supplier of software tools used to automate a manufacturing company. The following consolidated balance sheet and supplementary data are for Parametric for 2011: 
Supplementary Data for 2011 (in millions) 1. Net income, $85,424. 2. Income before interest and taxes, $117,114. 3. Cost of goods sold, $356,768. 4. Net sales, $1,166,949. 5. Total interest expense for the year, $3,310. 6. Weighted-average number of shares outstanding, 117,579. 
Current Assets Cash and cash equivalents 167,878 $         Accounts receivable, net of allowance for doubtful accounts of $3,902 230,220           Other current assets 194,166           Total Current Assets 592,264 $         Property and equipment, net 62,569             Goodwill 613,394           Other assets 361,455           Total Assets 1,629,682 $     
Current Liabilities Accounts payable and accrued expenses 77,141 $           Accrued compensation 95,980             Deferred revenue 279,935           Income taxes 16,335             Total Current Liabilities 469,391 $         Long-term liabilities 337,601          
Stockholders' Equity Preferred stock, $0.01 par value; 5,000 shares authorized; none issued                    Common stock, $0.01 par value; 500,000 shares authorized; 116,937      (2015) and 115,826 (2014) shares issued 1,169               Additional paid-in capital 1,805,021        Accumulated deficit (918,736)          Accumulated other comprehensive loss (64,764)            Total Liabilities and Stockholders' Equity 1,629,682 $     
PARAMETRIC TECHNOLOGY CORPORATION Consolidated Balance Sheet September 30, 2011 (in thousands)
Assets
Liabilities and Stockholders' Equity
Required: Calculate the following ratios and show your computations. For calculations normally involving averages, such as average accounts receivable or average stockholders’ equity, use year-end amounts if the information is not available to use averages. Round all answers to two decimal places. YOU MUST SHOW YOUR WORK TO RECEIVE CREDIT. The next page has been left blank for you to show your work. a. Working capital: ________________________________________________________________ b. Current ratio: __________________________________________________________________ c. Net income to average common stockholders’ equity: __________________________________ d. Accounts receivable turnover: _____________________________________________________ e. Number of days’ sales in accounts receivable (assume 365 days in 2015): __________________ f. Times interest earned ratio: _______________________________________________________ g. Equity ratio: ___________________________________________________________________ h. EPS of common stock: ___________________________________________________________ i. Net income to net sales: __________________________________________________________ j. Total asset turnover: _____________________________________________________________ k. Acid-test ratio: _________________________________________________________________
***A formula sheet has been provided at the end of this assignment***
 
Problem 3 Worksheet