Presented below are the comparative balance sheets of Big Apple, Inc., at December 31, 2017, and 2016. Sales for the year ended December 31, 2017, totaled $1,780,000.
BIG APPLE, INC.
Balance Sheets
December 31, 2017, and 2016
2017 2016
Assets
Cash $90,000 $98,000
Accounts receivable 268,000 212,000
Merchandise inventory 402,000 394,000
Total current assets $760,000 $704,000
Land 132,000 120,000
Plant and equipment 728,000 650,000
Less: Accumulated depreciation (372,000) (314,000)
Total assets $1,248,000 $1,160,000
Liabilities
Short-term debt $98,000 $86,000
Accounts payable 184,000 168,000
Other accrued liabilities 128,000 134,000
Total current liabilities $410,000 $388,000
Long-term debt 174,000 214,000
Total liabilities $584,000 $602,000
Stockholders’ Equity
Common stock, no par, 100,000 shares authorized, 35,000 and 28,000 shares issued, respectively $204,000 $156,000
Retained earnings:
Beginning balance 402,000 336,000
Net income for the year 148,000 134,000
Dividends for the year (90,000) (68,000)
Ending balance $460,000 $402,000
Total stockholders’ equity $664,000 $558,000
Total liabilities and stockholders’ equity $1,248,000 $1,160,000
Required:
A) Calculate ROI for 2017.
B) Calculate ROE for 2017.
C) Calculate working capital at December 31, 2017.
D) Calculate the current ratio at December 31, 2017.
E) Calculate the acid-test ratio at December 31, 2017.
Firm V has a current ratio of 1.9 and current assets of $136,800.
Required:
Calculate Firm V’s current liabilities and working capital.
Firm W has accounts receivable of $4,100, cash of $3,500, property, plant, and equipment of $30,200, merchandise inventory of $2,200, accounts payable of $5,700, other accrued liabilities of $1,300, common stock of $10,000, and retained earnings of $23,000.
Required:
Calculate Firm W’s working capital and current ratio.
Firm X has net income of $18,000, sales of $300,000, and average total assets of $125,000.
Required:
Calculate Firm X’s margin, turnover, and return on investment (ROI).
Firm Y has a margin of 7%, turnover of 1.2, and sales of $2,100,000.
Required:
Calculate Firm Y’s net income, average total assets, and return on investment (ROI).
Firm Z had net assets at the end of the year of $320,000. The only transactions affecting stockholders’ equity during the year were net income of $51,000 and dividends of $11,000.
Required:
Calculate Firm Z’s average stockholders’ equity and return on equity (ROE).
