Use
the
following
information
to
compute
profit
margin
for
each
separate
company
athrough
e.
(Round
your
answers
to
1
decimal
place)
@
Answer
is
complete
and
correct.
Eomp-ny
Netincome
|
NetSales
|
Profit
Margin
(%)
a s
6883
|s
54200
126%
@
b
109,500
482,380
27%@Q
<
113381
308,940
36.7%
@
[
9159
|
1761500
52%Q
e
93,562
525,740
176%
@
Which
of
the
five
companies
is
the
most
profitable
according
to
the
profit
margin
ratio?
Company
a
Company
b
Company
c
@
Company
d
Company
e
cash
5
6,200
Accounts
receivable
16,500
office
supplies
2,008
Trucks
183,000
Accunulated
cepreciation-Trucks
s
37,608
Lang
75,000
Accounts
payable
10,200
Interest
payable
3,000
Long-term
notes
payable
58,000
K.
Wilson,
Capital
172,073
K.
uilson,
Withdrawals
19,800
Trucking
revenue
115,500
Depreciation
expense-Trucks
2,315
Salaries
expense
54,170
Office
supplies
expense
6,353
Repairs
expense
9,533
Totals
(&)
Calculate
the
current
ratio
for
Wilson
Trucking
{b)
Assuming
Spalding
(a
competitor)
has
a
current
ratio
of
1.5,
which
company
is
better
able
to
pay
its
short-term
obligations?
© Answer
is
complete
but not
entirely
correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Show
less
&
Required
A |
Required
B
Calculate
the
current
ratio
for
Wilson
Trucking.
Current
Ratio
e
-
e
e
Current
assets
©|
1
|curentabittes
©|-
|
curentraio
5
w1
s
1200
w2
Requi
2
225
points
awarded
Use
the
information
in
the
following
adjusted
trial
balance
for
the
Wilson
Trucking
Company.
Aecount
Title vebit
credit
Cash
$
6,200
Scored
Accounts
receivable
16,500
Office
suppiies
Sro00
Tocks
183,000
Recumilated
depreciation-Trucks
5
37,608
Land
75,000
hetounts
payable
10,200
Tnterest
peyable
Sr000
Long-tern
nbtes
payable
551000
®
K.
WiLson,
Capital
Saen
-
K.
\ilaon,
vithranals
19,000
i
Trevense
115,500
Scpreciation
expense-Trucks
20,315
ST
s
frigedt
Ofice
suppiics
expense
paev
Repatns expense
oo
$
396,471
5
395,471
o
Totals
References
(a)
Calculate
the
current
ratio
for
Wilson
Trucking.
(b)
Assuming
Spalding
(a
competitor)
has
a
current
ratio
of
1.5,
which
company
is
better
able
to
pay
its
short-term
obligations?
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Show
less
&
Required
A
|
Required
B
Calculate
the
current
ratio
for
Wilson
Trucking.
Current
Ratio
|
Choose
Numerator
/
Choose
Denominator
-
|
CurrentRatio
|
Current
assets
~|
1
[Current
liabilties
-]
=
Current
ratio
s
24700
1
[s
1200l
=
187
-
PR
12
December
31
Il
Assets
Current
assets
[
Accounts
receivable
[]
s
4750@
cash
[
15.250
@
Merchandise
inventory
[
5750
@
Prepaid
insurance
[]
5,000
Total
current
assets
30750
Long-term
investments
[]
Notes
receivable
[]
19,500
@
Tota long-term
investments
assets
19,500
Plantassets
)
Machinery
Qs
2600Q
|Accumulated
depreciation-Machinery
[}
19,000
@
7,000
Tota
plant
assets
7,000
Total
assets
57,250
Liabilties
Current
liabilities
[
Accounts
payable
[]
s
12500
@
Salaries
payable
[]
1750
@
Total
current
izbilties
14,250
Long-term
labilities
[
Notes
payable
] 3500 Q
Tota long-term
liabiies
35,000
Total
liabilties
49,250
Equity
S
Andrea,
Capital
[]
54,000
@
Total
labilties
and
equity
03,250
Required
information
@
Answer
is
complete
and
correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Required
1
|
Required
2
Prepare
the
income
statement
for
the
year
ended
December
31.
WILSON
TRUCKING
COMPANY
Income
Statement
For
Year
Ended
December
31
o
Revenues
Trucking
revenue
Q
s
144,000
@
Expenses
Depreciation
expense—Trucks
@
|5
24,900
@
Salaries
expense
Q|
6520Q
Office
supplies
expense
Q
9,400
@
Interest
expense
Q|
1340Q
Total
expenses
112,900
Netincome
5
31100
The
K_Wilson,
Capital
account
balance
was
$184,000
at
December
31
of
the
prior
year,
and
there
were
no
owner
investments
durir
the
year.
(1)
Prepare
the
income
statement
for
the
year
ended
December
31
(2)
Prepare
the
statement
of
owner's
equity
for
the
year
ended
December
31
@
Answer
is
complete
and
correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Required
1
|
Required
2
Prepare
the
statement
of
owner’s
equity
for
the
year
ended
December
31.
WILSON
TRUCKING
COMPANY
B
Statement
of
Owner’s
Equity
B
[
For
Year
Ended
December
31
b
K.
Wilson,
Capital,
December
31
prior
year
5184‘000
Y
'Add:
Investments
by
owner
0
Add:
Netincome
Q|
311000
215,100
Less:
Withdrawals
by
owner
Q|
2140Q
K
Wison,
Capita,
December
31
currentyear
193
700
Camaro
1o
Torino
cash
$
2,300
$
210
$
1,200
Short-term
investments
o
o
s00
Current
receivables
220
as0
00
Inventory
2,125
1,980 2,950
Prepaid
expenses
300
600 900
Total
current
assets
Current
lisbilities
a.
Compute
the
acid-test
ratio
for
each
of
the
separate
cases
above.
b.
Which
company
is in
the
best
position
to
meet
short-term
obligations?
@
Answer
is
complete
and
correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Required
A
|
Required
B
Compute
the
acid-test
ratio
for
each
of
the
separate
cases
above.
[
Acid-Test
Ratio
&
Choose
Numerator:
Choose
Denominator:
=
Quick
assets
@
|/
|Currentliabilities
Q|-
Camaro
[$
250@|/
s
2180@
|=
GTO
s
700@|/
s
1300@
=
Torino
s
210@|/
s
3450
@
=
For
each
ratio,
select
the
building
block
of
financial
statement
analysis
to
which
it
best
relates.
@
Answer
is
complete
and
correct.
1
Price-eamings
ratio
Market
prospects
o
2
Return
on
total
assets
Profitability
o
3
Debt-to-equity
ratio
Solvency
o
4.
|
Gross margin
ratio
Profitability
Q
5
Times
interest
eamned
Solvency
o
6
Inventory
turnover
Liquidity
and
efficiency
o
7
Profit
margin
ratio
Profitability
o
8
Debt
ratio
Solvency
o
9
Current
ratio
Liquidity
and
efficiency
o
7
Part10f2
25
points
Earning:
Required
information
<
per
share
Additional
information
about
the
company
follows,
Conmon
Common
Annual
Annual
stock
market
price,
December
31,
Current
Year
Stock
market
price,
December
31,
1
Year
Ago
cash
dividends
per
share
in
Current
Year
cash
dividends
per
share
1
Year
Ago
s
»
e
32.00
30.00
0.34
0.17
For
both
the
current
year
and
one
year
ago,
compute
the
following
ratios:
1.
Return
on
common
stockholders’
equity.
2.
Dividend
yield.
3a.
Price-eamings
ratio
on
December
31
3b.
Assuming
Simon's
competitor
has
a
price-earnings
ratio
of
7,
which
company
has
higher
market
expectations
for
future
growth?
©
Answer
is
complete
but
not
entirely
correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Required
1
|
Required
2
|
Required
3A
|
Required
38
Compute
the
return
on
common
stockholders'
equity
for
each
year.
[
Retum
On
C
Equity
L
Numerator:
Denominator:
E
Return
On
CDIE::]D.':IY
Stockholders
Netincome
~
@|-
|Preferred
divi
’;‘;i"@ge
common
stockholders’
@)
|_
|
Retyrn
on
common
stockholders'
equity
CurrentYear:
|5
39630
|-
@
|s
179,086
@
|=
21
[%
1
Year
Ago:
s
6900
@
|s
155301
@
|=
28
|%
Required2
>
%
90
=|
@000
s
@0
3|
oby
1eaj
|
%
b
=
@o0ze
s
/|
@veD
9|
:13)
JuaLIn)
plelk
puspING
E)
Sieys
o0
2oud
eyiely|
/|
@)
aieys
Jod
SpuSpIp
Used
[enuuy
|
[
P
pusping
-
i
olereuny
B
PIETK
PUPIAG
|
(se0e(d
[ewpap
Z
01
SiemSUE
40
punoy)
weak
Yoes
Joj
piaik
puspIAp
a1
aandwiod
9Epaunbay
|
vEPpaUNDIY
I
7
paunbay
| T
painbay
“moj2q
5qe1
a1
uj
sseMsuE
oA
bupis1ua
Aq
uonsanb
siyy
2191dwiod
192100
Aj21uB
10U
1nq
219|dwiod
51
JPMSUY
@)
2401
31y
1o)
suoneadxs
12new
1By
sey
Auedwiod
yAIYM
J0
ones
sBujsea-231d
e
Sey
oMadwod
Suows
BuNSsy
“qg
1€
13qUS23Q
UO
Ofes
SBUILIES-301d
BE
DIIA
PUSPING
T
Aunba
SIBPIOLPPOIS
UOWILLIOD
U0
LMY
7}
Sones
Buimoljoy
U
3Indwwo
“0Be
JEaA
3O
Pue
B3k
WBLIND
Y
LROG
10
e
o8y
uea
T
aueus
uad
spuspTATP
use>
Temuuy
o
Jea)
3UBUIm3
UT
2Jeys
Jad
SPUSPIATP
yse>
Tenuuy
00t
08y
4eax
T
“TE
Jequeraq
“27ud
3oew
035
Uow0)
o0z
¢
g3
30a0an>
T
4aquedaq
“2>7d
3aidew
o035
owHo)
‘SM0]j0}
AUBdLIOD
3}
1MOGe
UOWLIOJUI
[BUONIPPY
e
=
sueus
uad
sSutusen
uopeunioju
pasnbay
swiod
Ti04ued
L
Required
information
sertiors
Common
stock
market
price,
December
31,
Current
Year
s
32.00
Common
stock
market
price,
December
31,
1
Year
Ago
30.00
f—
Annual
cash
dividends
per
share
in
Current
Year
0.34
Annual
cash
dividends
per
share
1
Year
Ago
0.17
\51
For
both
the
current
year
and
one
year
ago,
compute
the
following
ratios:
oints
1.
Return
on
common
stockholders'
equity.
2.
Dividend
yield
3a.
Price-earnings
ratio
on
December
31
3b.
Assuming
Simon's
competitor
has
a
price-earnings
ratio
of
7,
which
company
has
higher
market
expectations
for
future
growth?
©
Answer
is
complete
but
not
entirely correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Required
1
=
Required
2 I
Required
3A
Required
38
Compute
the
price-earnings
ratio
for
each
year.
(Round
your
answers
to
2
decimal
places.)
Price-Eamings
Ratio
Numerator:
i
Denominator:
-
|
Pricefamings
Market
price
per
common
@/
|
Earmings
per
share
Q-
|
Piessamings
5:;;?"‘
®
20@
|5
214@|-
P
1
Year
Ago:
&
3000@|
s
221@|=
132
<
Required
2
Required
38
>
;
°Req
d
information
Net
income
5
39,638
5
36,910
arnings
per
share
2.00
2.27
Part1of2
B
e
h
g 2
Additional
information
about
the
company
follows,
25
Common
stock
market
price,
December
31,
Current
Year
5
32.00
points
Common
stock
market
price,
December
31,
1
Year
Ago
30.00
Annual
cash
dividends
per
share
in
Current
Year
034
Annual
cash
dividends
per
share
1
Year
Ago
017
For
both
the
current
year
and
one
year
ago,
compute
the
following
ratios:
1.
Return
on
common
stockholders'
equity.
2.
Dividend
yield.
3a.
Price-eamings
ratio
on
December
31
3b.
Assuming
Simon's
competitor
has
a
price-earnings
ratio
of
7,
which
company
has
higher
market
expectations
for
future
growth?
©
Answer
is
complete
but not
entirely
correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Required
1
|
Required
2
|
Required
3A
:
Required
38
Assuming
Simon's
competitor
has
a
price-earnings
ratio
of
7,
which
company
has
higher
market
expectations
for
future
growth?
h
ich
company
has higher
market
expectations
for
future
growth?
[
simon
Company
<
Required
3A
8
Simon
Company's
year-end
balance
sheets
follow,
At
December
31
Current
Year
1
Year
Ago
2
Years
Ago
hssets
Part20f2
Cash
$
35,979
$
42,057
$
41,245
==
Accounts
receivable,
net
102,194
75,071 55,560
Merchandize
inventory
133734
100,172
61,599
Prepaid
expenses
11,471 10,925
4725
25
Plant
assets,
net
326,443
207477
266,371
points
Total
assets
5
609,821
3
525,708
5
429,500
Lisbilities
and
Equity
Accounts
payable
s1sa82
$o0,e2
557,82
Long-term
notes
payable
112]353
117,285
92072
Common
stock,
$10 par
value
163,500 162,500 162,500
Retained carnings
179,086 155,501 117,100
Total
lisbilities
and
equity
5
609,821
3
525,708
3
429,500
The
company’s
income
statements
for
the
current
year
and one
year
ago,
follow.
For
Year
Ended
December
31
Current
Year
1
vear
Ago
Sales
$
792,767
$
625,503
Cost
of
goods
sold
$
483,588
$
406,635
Other
operating
expenses
205,755 158,275
Interest
expense
13,477 14,389
Income
tax
expense
10,306
9,380
Total
costs
and
expenses
753,120
538,653
Net
income
s
39,638
s
36,910
Earnings
per
share
5
2.44
s
2.27
For
both
the
current
year
and
one
year
ago,
compute
the
following
ratios:
(1)
Debt
and
equity
ratios.
(2)
Debt-to-equity
ratio.
(3-8)
Times
interest
eamed.
(3-b)
Based
on
times
interest
eamed,
is
the
company
more
or
less
risky
for
creditors
in
the
Current
Year
versus
1
Year
Ago?
(3-8)
Times
interest
eamed.
(3-b)
Based
on
times
interest
earned,
is
the
company
more
or
less risky
for
creditors
in
the
Current
Year
versus
1
Year
Ago?
Q
Answes
not
complete.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Required
1
Required
2
Required
3A
Required
38
Compute
debt
and
equity
ratio for
the
current
year
and one
year
ago.
Debt
Ratio
[
Numerator:
I
Denominator:
[=
Debt
Ratio
|
Total
liabilities
@|/
|Total
assets
Q-
Debt
ratio
S:;f"‘
S
267235@
|/
|8
609,821
@
|=
38
|%
1YearAgo:
S
207907@|1
s
525,708
@
|=
395
|%
L
Equity Ratio
B
B
|
Numerator:
1
Denominator:
-
Equity
Ratio
N
Total
equity
Q|
Total
assets
Q=
Equity
ratio
5:;‘:’“'
s
342586
@
|/
|5
609,821
@
|=
562
|%
1YearAgo:
[
317801@[/
s
525,708
@
|=
605
|%
Net
income
$
39,638
$
36,910
Required
information
Earnings
per
share
$
2.44
$
2.27
For
both
the
current
year
and
one
year
ago,
compute
the
following
ratios:
(1)
Debt
and
equity
ratios.
(2)
Debt-to-equity
ratio.
(3-a)
Times
interest
earned.
(3-b)
Based
on
times
interest
earned,
is
the
company
more
or
less
risky
for
creditors
in
the
Current
Year
versus
1
Year
Ago?
©
Answer
is
complete
but not
entirely
correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Required
1
Required
2
Required
3A
|
Required
38
Compute
debt-to-equity
ratio
for
the
current
year and one
year
ago.
Debt-To-Equity
Ratio
B
Numerator:
I
Denominator:
L
i
Total
liabilities
@
|/
|Total
equity
Q=
Debt-to-equity
ratio
Current
Year:
(5
267235@|
|5
342,586
@
|=
078
[to1
1
Year
Ago:
s
207907
@
|5
317.801
@
065
[to1
RN
T
©
Answer
is
complete
but not
entirely
correct.
Complete
this
question
by
entering
your
answers
in
the
tabs
below.
Required
1
|
Required
2
i
Required
3A
Required
38
Compute
times
interest
earned
for
the
current
year
and
one
year
ago.
Times
Interest
Farned
. .
E
Times
Interest
Numerator:
i
Denominator:
-
e
Income
before
interest
and
income
tax
@
|/
|Interest
expense
Q|-
Times
interest
Current
Year:
[$
63421@|/
|5
13477
@
47
|times
1
Year
Ago:
s
60683@|/
|5
14,389
@
42
|times
<
Required
2
[CE
L
Y
Ratio|
Formul
Liquidity
and
Efficiency
Current
assets
Current
ratio
—_—
Current
liabilities
Acid-test
ratio
_
Cash
+
Short-term
investments
+
Current
receivables
Current
liabilities
Net
sales
~
Average
accounts
receivable,
net
Cost
of
goods
sold
Average
inventory
Accounts
receivable,
net
Days'sales
uncollected
—
Accounts
receivable,
net ,
365
-
Net
sales
_
Ending
inventory
_
Cost
of
goods
sold
Net
sales
‘Average
total
assets
Accounts
receivable
turnover
Inventory
turnover
365
Days’
sales
in
inventory
Total
asset
tunover
Solvency
Total
liabiliies
Dest
ratio
o
o
Total
assets
Total
equity
equity
ratio
s
&
Total
assets
Debt-to-equity
ratio =
Dot
Al
=
“Total
equity
Income
before
inferest
expense
and
income
taxes
Times
interest
eamed
=
Tnterest
expense
Profitability
Net
income
Profit
margin
ratio
e
Net
sales
Net
sales
—
Cost
of
goods
sold
Gross
margin
ratio
Bt
=
SR
Net
sales
Net
income
Retum
on
total
assets
=S
Average
total
assets
"
Net
income
etum
on
equ
e
quity
Average
total
equity
Net
income
—
Preferred
dividends
Basic
earmings
per
share
=
e
Weighted-average
common
shares
outstanding
Market
Prospects
Market
price
per
common
share
"
Eamingspershae
Annual
cash
dividends
per
share
"
Market
price
per
share
Price-eamnings
ratio =
Dividend
yield
Measure
of
Short-term
debt-paying
ability.
Immediate
short-term
debt-paying
ability
Eficiency
of
collection
Eficiency
of
inventory
management
Liquidity
of
receivables,
Liquidity
of
inventory
Eficiency
of
assets
in
producing
sales
Creditor
financing
and
leverage
Owner
financing
Debt
versus
equity
financing
Protection
in
meeting
interest
payments
Net
income
in
each
sales
dollar
Gross
margin
in
each
sales
dollar
Overall
profitability
of
assets
Profitability
of
owner
investment
Net
income
per
common
share
Market
value
relative
to
eamings
Cash
return
per
common
share
