Question

Class Assignment 16 Comparative Balance Sheet AgBiz Corporation December 31, Year 1 Assets December 31, Year 2 Account Difference Percent Difference $ 49,000 5,000 151,000 $205,000 $ 17,000 30,000 127,000 $ 174,000 $ -32,000 +25,000 -24,000 $ -31,000 -653 +500.0 -15.9 15.1 Current assets: Cash Accounts receivable Inventories Total current assets Fixed assets: Land Buildings and equipment Less: Depreciation Total fixed assets Other investments: Cash value of life insurance Investment in other firms Investment in subsidiary Total other Total assets 250,000 500,000 - 150,000 600,000 250,000 660,000 -170,000 740,000 +160,000 -20.000 $+140,000 +200 +3.1 6,400 24,400 75,000 105,800 $910.800 6,600 24,400 75.000 106,000 $1,020,000 +200 $+109,200 +12.0 $ +33,000 +250 +165.0 +16.7 +15,200 +48,450 +76.0 +116.7 Liabilities and Owners' Equity Current liabilities: Accounts and notes payable $ 20,000 $ 53,000 Accrued taxes payable 1,500 1.750 Installment on long-term debt due this year 20,000 35,200 Total current liabilities 41,500 89,950 Long-term liabilities: Long-term notes payable 301,600 320,050 Total liabilities $343,100 $ 410,000 Owners' equity: Capital stock 390,500 390,500 Retained earnings, January 1 147,200 177,200 Net Income for the year 30,000 42,300 Retained earnings, December 31 $567,700 $ 610,000 Total liabilities and owners' equity $910,800 $1,020,000 +18.450 +66,900 +6.1 +19.5 +30,000 +12,300 $ +42,300 $+109,200 +12.0 Figure 14-1 Comparative Balance Sheet

Answer 1

Current Ratio et linn CIR: CACL : att i CA Year! $ 205,000 $ 41,500 ra Year 2 8.174,000 $ 89,950 CL CIR 205000, Dipte 4500 124000 89,950 1.93 = 4.94 on. Conclusion: I low Yearl is better, as in I has maximum current assets Current liabilities year I the company to satisfy its Quick Ratio QIR = ( current CA Inventory C O Assets - Inventory) I Curr. liab. 1 Yeart roman Year 2 $.205000 t $174,000 $ 151,000 $123,000 % 41,500 $89.950 2 OR ( 205,000 -151600) 41,500 - 1.30 (194000 - 127000) 89,450 0.52 conclusion: - Year! assets to CamScanner is better satisfy its as it has more liquid current liabillhes.

3) Act Acid Aid Both the synonym of quick I Ratio. Test Ratio Post Ratio is one same. Hence, the quick ratio. answere here will be same as DJ 4 | Debt D I& to Ratio Equity = 0 T Ratio Total liabilities Sh-holden's Equity Toral Gabilities Owness Equity i Yearl $343100 . $567 for Year 2 $410,000 $610,000 . DIE Ratio 3431003 567900 ja 410000 610.000 = 0.60 0.67 Conclusion: ot two tog Year I io better as the co. is rome | busa business with more owner's capital rather than external debt. This will proloct the . There holders interest in the event of busines dei vine. U Stanned with Cimscate

Time interest Earned Ratio ___ _ Earning before interest and her 1. Interest expenses of Earning before 6 Interest Exp. tax Yearl $ 36,000 4000 $ 40,000 Year 2 $ 51,000 5000 $ 56,000 EBIT (a+b) da Time interest Corned Ratio 40,000 4000 56,000 5000 = 10 +1.2 Conclusion 1 year 2 is I coo's ability to better. better, as in year 2 , the meet the interest payment is Year 2 - 67 Inventory Turnover Ratio = Cost of Goods sold - Average Incentery 1 Year! O COGS $ 10,26,000 100,000 1 Ending 151,000 Inventory |d? Aug. laven tussy [(576712]_ 125,500 they gaventory Tlo Ratio (a+d) 8.18 (6) Beginning gevent $ 11, 29,000 151000 127,000 139,000 8.12 goods Conclusion Year I is better, as in year I, the mone quicle in entering and leaving business, t the

Tear 2 7 Average no, of days for inventory to Turnover 0 Year1 Year 2 lo inventery Tlo Ratio 8.18 8:12 12) No. of days in a year 365 365 o Aug. no. of day (ab) un, 6 days 44.9 dan Conclusion : You : Year I is better as the inventory is moving II is less th time as compared to year 2 CamScanner TCS Scanned with