Question

As the newest hire to the financial analysis group at Patterson Printing Company, you have been asked to perform a basis financial analysis of the company's most recent financial statements. The 2016 balance sheet and income statement for the Patterson are shown here:

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.a. After discussing your training asignment with a fellow analyst who was hired last year, you learn that the first step in your completing the assignment is to

prepare

a common-size balance sheet for Patterson.

b. The second step is to prepare a common-size income statement for the firm.

a. After discussing your training asignment with a fellow analyst who was hired last year, you learn that the first step in your completing the assignment is to

prepare

a common-size balance sheet for Patterson.

Complete the common-size balance sheet below: (Round to one decimal place.)

a. After discussing your training asignment with a fellow analyst who was hired last year, you learn that the first step in your completing the assignment is to

prepare

a common-size balance sheet for Patterson.

Complete the common-size balance sheet below: (Round to one decimal place.)

Common-Size Balance Sheet		2016
Cash and marketable securities	$	470		%
Accounts receivable		5,980
Inventory		9,540
Total current assets	$	15,990		%
Net property, plant, and equipment		17,050
Total assets	$	33,040		%
Accounts payable	$	7,160		%
Short-term debt		6,810
Total current liabilities	$	13,970		%
Long-term liabilities		6,960
Total liabilities	$	20,930		%
Total common stockholders’ equity		12,110
Total liabilities and shareholders’ equity	$	33,040		%

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he S&H Construction Company expects to have total sales next year totaling

$ 15 comma 000 comma 000$15,000,000.

In addition, the firm pays taxes at

3535

percent and will owe

$ 300 comma 000$300,000

in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be

6060

percent of sales and operating expenses will total

3030

percent. What is your estimate of the firm's net income (after taxes) for the coming year?

Complete the pro-forma income statement below: (Round to the nearest dollar.)

Pro-Forma Income Statement
Sales	$
Cost of goods sold
Gross profit	$
Operating expenses
Net operating income	$
Interest expense
Earnings before taxes	$
Taxes
Net income	$

----

The King Carpet Company has

$ 2 comma 910 comma 000$2,910,000

in cash and a total of

$ 11 comma 890 comma 000$11,890,000

in current assets. The firm's current liabilities equal

$ 5 comma 210 comma 000$5,210,000

such that the firm's current ratio equals

2.32.3.

The company's managers want to reduce the firm's cash holdings down to

$ 1 comma 050 comma 000$1,050,000

by paying

$ 576 comma 000$576,000

in cash to expand the firm's truck fleet and using

$ 1 comma 284 comma 000$1,284,000

in cash to retire a short-term note. If they carry this plan through, what will happen to the firm's current ratio?

The new current ratio is

nothing.

(Round to one decimal place.)

Answer 1