Exercise 4-6 & Comparative Analysis

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Exercise 4-6

Use the following adjusted trial balance of Resource Trucking Company to prepare the (1) income statement, and (2) statement of owner’s equity, for the year ended December 31, 2009.  The J. Resco, Capital account balance is $161,901 at December 31, 2008.

                                                       Debit                               Credit
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,800
Accounts receivable . . . . . . . . . . . . . . . . . . . 17,500
Office supplies . . . . . . . . . . . . . . . . . . . . . .     3,000
Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . .  156,000
Accumulated depreciation—Trucks . . . . . . . .                                    $ 32,136
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   85,000
Accounts payable . . . . . . . . . . . . . . . . . . . . .                                          9,800
Interest payable . . . . . . . . . . . . . . . . . . . . . .                                           4,000
Long-term notes payable . . . . . . . . . . . . . . .                                         53,000
K.Webb, Capital . . . . . . . . . . . . . . . . . . . . .                                         161,901
K.Webb, Withdrawals . . . . . . . . . . . . . . . . .   20,000
Trucking fees earned . . . . . . . . . . . . . . . . . .                                       121,000
Depreciation expense—Trucks . . . . . . . . . . . 20,727
Salaries expense . . . . . . . . . . . . . . . . . . . . . 56,749
Office supplies expense . . . . . . . . . . . . . . . .   6,655
Repairs expense—Trucks . . . . . . . . . . . . . . . 10,406
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $381,837                       $381,837 

1. Use the information in the adjusted balance reported above to compute the current ratio as of the balance sheet date (round the ratio to one decimal).  Interpret the current ratio for the Resource Trucking Company.  (Assume that the industry average for the current ratio is 1.5)

Financial ratios

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A firm has the following summary balance sheet and income statement (in millions)

Net operating assets 469
Net financial obligations 236
Common equity 233
Operating income 70
Net financial expenses 14
Earnings 56
The firm held the same amount of net financial obligations during the whole year for which the earnings were reported. The equity of this firm trades at a P.B ratio of 2.9. The firm pays no dividends.
a. Calculate the levered P.E ratio for this firm.
b. Calculate the enterprise P.B and P.E ratios. 

Financial ratios

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                                                 2005              2006
Operation assets                         2000               2700
     Marketable debt security               400                100
     Operating liabilities                      (100)              (300)
Bonds payable                            (1400)             (1300)
Book value
                                                  $900              $1200
Sales                                                                  2100
Operating expenses                                             (1677)
Interest revenue                                                   27
Interest expenses                                                (137)
     Tax expense (rate=34%)                                      (106)
Earning (net)                                                        207

a. Calculate the dividends, net of capital contribution, for 2006.

Nominal, Ordinal, Interval, Ratio

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Determine the types of measurement scales for each variable (Nominal, Ordinal, Interval, Ratio):

1)     Name
2)     Gender
3)     Absences
4)     Physical Education (PE)
5)     Math
6)     Writing
7)     Reading
c.     Determine the correlations between pairs of all interval variables (i.e., Absences with PE, PE with math, math with writing, etc.)

Accounting Week 4 Explanation - Home Depot 2008

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Instructor Comments: You may want to use the audited financial statements for Home Depot (which can be found in your online text) as the company to evaluate. Week 4 Individual project: Assignment Type: Individual Project Deliverable Length: 5-10 PowerPoint slides / can include an Excel file for financial analysis Points Possible: 125 Due Date: 1/30/2011 11:59:59 PM CT Choose a public company in the food industry. Analyze the financial statements and assess whether the financial performance has improved or declined year-over-year. Analysis techniques include the following: * comparative financial statements * trend analysis * ratio analysis * percentage analysis Presentation of 5–10 PowerPoint slides that includes the following: * At least 3 slides relevant to the analysis prepared * An analysis of the performance of the firm based on the analysis tools used * A summary of the company's financial performance and assessment of whether it has improved or declined year-over-year in terms of profitability, asset utilization, and liquidity Background on Course Research Requirements: In the business world, it is important to use research to strengthen points made in presentations and projects. Learning to use the search functions in databases for research is a crucial critical thinking skill that complements other research techniques. There are two main types of databases. You must stay away from inferior Web sites with anonymous writers; articles found on consultant Web sites, and materials on Web sites that are not reputable. Dictionaries and encyclopedias most often repeat the information from textbooks. Acceptable Internet resources include, among others, government sites (especially for statistics). Wikipedia or any open source Web sites are not permitted. Please submit your assignment. For assistance with your assignment, please use your text, Web resources, and all course materials. Please refer to the following multimedia course material(s): * Unit 4: Preparing Financial Statements * Unit 4: Statements & Accounting Equation I have provided an excel template under Instructor Files that you can use instead of PowerPoint. We will discuss tools you can use for the ratio analysis in our first chat session of the week. We will look at liquidity, solvency, profitability, and management efficiency ratios in our weekly chat. Posted under Instructor Files is a Decision Guidelines for Financ­ial Statement Analysis that may be useful. Please use this as a guide to help you fill out the excel workbook template located under Instructor Files (you are not expected to complete all the ratios in the Decision Guidelines for Financial Statement Analysis). I have also posted under Instructor Files a template (excel workbook) you may use instead of creating a PowerPoint. This template will help you in apply the ratios. Please insert your narrative analysis/explanation of the ratios you use directly into the excel document, the last tab is designated for your conclusions. Submit only one document for this assignment.