Question

The 2012 financial statements for the Griffin Company are as follows:

                                    Griffin Company

                                    Statement of Financial Position

                                                            12/31/12                                  12/31/11

Assets
Cash	$40,000	$10,000
Accounts receivable	30,000	55,000
Inventory	110,000	70,000
Property, plant, and equipment	250,000	257,000
Total Assets	$430,000	$392,000
Limited and stockholders’ equity
Current liabilities	$40,000	$50,000
5% mortgage payable	30,000	162,000
Common Stock (30,000 shares)	110,000	150,000
Retained earnings	250,000	30,000
Total liabilities and stakeholder’s equity	$430,00	$392,000

            Griffin Company

Income statemen for the year ended December 31,2012

Sales on account	$420,000
Less expenses:
Cost of goods sold	$214,000
Salary expense	50,000
Depreciation Expense	7,000
Interest Expense	9,000
Total Expense	$280,000
Income before taxes	$140,000
Income tax expense (50%)	70,000
Net Income	$70,000

Compute the following ratios for the Griffin Company for the year ending December 31,2012:

1. Profit margin ratio (before interest and taxes)
2. Total asset turnover
3. Rate of Return on total assets
4. Rate of return on common stockholder’s equity
5. Earnings per share of stock
6. Inventory turnover
7. Current ratio
8. Quick ratio
1. Accounts receivable turnover
10. Debt to equity ratio
11. Times interest earned
12. What conclusions can you draw regarding this company's performance?
13. Do you believe you have enough information to make a thorough analysis? Take into considerations the benefits of trend analysis.

(Please provide excel formulas to calculations)

Answer 1

a.profit margin ratio = (profit before taxes and interest/ Net sales)*100

=149000/420000 )*100           [140000 profit before taxes + 9000 interest]

=35.48%

b. total asset turnover ratio

net sales/ average total asset

420000/[(430000+392000)/2]

420000/411000

1.022

c.rate of return on total asset

Net Income / Average total Assets

=70000/411000

17.03%

d.Rate of return on common stockholder's equity

Net income / Average common equity

=70000/[(110000+150000)/2]

53.85%

e.eps= net income / no of shares outstanding

=70000/30000

=2.33$