# BBA3301 Columbia Southern Unit V Balance Sheet Income Statement Question InstructionsTo complete the assignment, click here to download the worksheet, and

BBA3301 Columbia Southern Unit V Balance Sheet Income Statement Question InstructionsTo complete the assignment, click here to download the worksheet, and type your answers in the fields provided. Save the document using your last name and student ID. Once complete, upload your assignment to Blackboard for grading. BBA 3301 Unit V Assignment

Instructions: Enter all answers directly in this worksheet. When you are finished, select Save As, and

save this document using your last name and student ID as the file name. Upload the data sheet to

Blackboard as a .doc, .docx or .rtf file when you are finished.

Question 1. (30 points total) Use this balance sheet and income statement from Carver Enterprises to

complete parts a and b:

a. (15 points) Prepare a common size balance sheet for Carver Enterprises. Complete the commonsize balance sheet: (Round to one decimal place.)

Common−Size Balance Sheet

Cash and marketable securities

2013

$

490

Accounts receivable

5,990

Inventories

9,550

%

BBA 3301 Unit V Assignment

Current assets

$

Net property plant and equipment

16,030

%

17,030

Total assets

$

33,060

%

Accounts payable

$

7,220

%

Short−term debt

Current liabilities

6,800

$

Long−term liabilities

Total liabilities

14,020

%

7,010

$

21,030

Total owners’ equity

12,030

Total liabilities and owners’ equity $

33,060

%

%

b. (15 points) Prepare a common-size income statement for Carver Enterprises. Complete the

common-size income statement: (Round to one decimal place.)

Common−Size Income Statement

Revenues

Cost of goods sold

Gross profit

Operating expenses

Net operating income

Interest expense

Earnings before taxes

Taxes

Net income

2013

$ 30,020

%

(19,950)

$ 10,070

%

(7,960)

$ 2,110

%

(940)

$ 1,170

%

(425)

$ 745

%

Question 2. (10 points total) Use this data table of Campbell Industries liabilities and owners’ equity to

complete parts a and b.

a. (5 points) What percentage of the firm’s assets does the firm finance using debt (liabilities)?

(Round to one decimal place.)

BBA 3301 Unit V Assignment

b. (5 points) If Campbell were to purchase a new warehouse for $1.3 million and finance it entirely

with long-term debt, what would be the firm’s new debt ratio? (Round to one decimal place.)

Question 3. (10 points total) (Liquidity analysis) Airspot Motors, Inc. has $2,433,200 in current assets

and $869,000 in current liabilities. The company’s managers want to increase the firm’s inventory, which

will be financed using short-term debt. How much can the firm increase its inventory without its current

ratio falling below 2.1 (assuming all other assets and current liabilities remain constant)? (Round to one

decimal place.)

Question 4. (10 points total) (Efficiency analysis) Baryla Inc. manufactures high quality decorator lamps

in a plant located in eastern Tennessee. Last year the firm had sales of $93 million and a gross profit

margin of 45 percent.

a. (5 points) How much inventory can Baryla hold and still maintain an inventory turnover ratio of at

least 6.3 times? (Round to one decimal place.)

b. (5 points) Currently, some of Baryla’s inventory includes $2.3 million of outdated and damaged

goods that simply remain in inventory and are not salable. What inventory ratio must the good

inventory maintain in order to achieve an overall turnover ratio of at least 6.3 (including the

unsalable items)? (Round to one decimal place.)

Question 5. (15 points total) (Profitability and capital structure analysis) In the year that just ended,

Callaway Lighting had sales of $5,470,000 and incurred cost of goods sold equal to $4,460,000. The

firm’s operating expenses were $128,000 and its increase in retained earnings was $42,000 for the year.

There are currently 99,000 common stock shares outstanding and the firm pays a $4.770 dividend per

share. The firm has $1,180,000 in interest-bearing debt on which it pays 7.7 percent interest.

a. (5 points) Assuming the firm’s earnings are taxed at 35%, construct the firm’s income statement.

Income Statement

Revenues

$

Cost of Goods Sold

Gross Profit

$

Operating Expenses

Net Operating Income

$

Interest Expense

Earnings before Taxes

Income Taxes

$

BBA 3301 Unit V Assignment

Net Income

$

b. (5 points) Calculate the firm’s operating profit margin and net profit margin. (Round to one

decimal place.)

The operating profit margin is

The net income margin is

c.

%

%

(5 points) Compute the times interest earned ratio.

The times interest earned ratio is

%

What does this tell you about Callaway’s ability to pay its interest expense? (Fill in the blank with

the times interest earned ratio from above and select the best choice.)

1) Callaway’s operating income can fall as much as ______ times the interest expense and

the company would still be able to service its debt.

2) Callaway’s interest expense is _______ times higher than its competitors.

3) Callaway’s gross profit can fall as much as ______ times and still be able to service its

debt.

4) Callaway’s operating income can fall as much as ______ times and still be able to repay

its debt.

Answer:

What is the firm’s return on equity? (Select the best choice.)

1) The firm’s return on equity is the same as the net profit margin, 9.4%.

2) The firm’s return on equity is the sum of the operating profit margin and the net profit

margin, 25.5%.

3) There is not enough information to answer this question.

4) The firm’s return on equity is the same as the operating profit margin, 16.1%.

Answer:

Question 6. (5 points total) (Market value analysis) Lei Materials’ balance sheet lists total assets of

$1.16 billion, $132 million in current liabilities, $415 million in long-term debt, $613 million in common

equity, and 58 million shares of common stock. If Lei’s current stock price is $52.08, what is the firm’s

market-to-book ratio? (Round to one decimal place.)

Question 7. (5 points total) (DuPont analysis) Bryley, Inc. earned a net profit margin of 5.1 percent last

year and had an equity multiplier of 3.49. If its total assets are $109 million and its sales are $157 million,

what is the firm’s return on equity? (Round to one decimal place.)

BBA 3301 Unit V Assignment

Question 8. (15 points total) (Calculating financial ratios) Use the balance sheet and income statement

for the J. P. Robard Mfg. Company to calculate the following ratios:

Current ratio (Round to two decimal places.)

Times interest earned (Round to two decimal places.)

Inventory turnover (Round to two decimal places.)

Total asset turnover (Round to two decimal places.)

Operating profit margin (Round to one decimal places.)

Operating return on assets (Round to one decimal places.)

Debt ratio (Round to one decimal places.)

Average collection period (Round to one decimal places.)

Fixed asset turnover (Round to two decimal places.)

Return on equity (Round to one decimal places.)

times

times

%

%

%

days

%

Purchase answer to see full

attachment