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Question(s) / Instruction(s):

*Ex. 24-90—Financial statement analysis.
The condensed financial statements of James Company for the years 2007-2008 are presented below:

James Company

Comparative Balance Sheets

As of December 31, 2008 and 2007

 

2008

 

2007

 

Cash

$ 420,000

$ 120,000

Receivables (net)

460,000

300,000

Inventories

380,000

340,000

Plant and equipment

1,700,000

1,112,000

Accumulated depreciation

(260,000)

(192,000)

 

$2,700,000

$1,680,000

Accounts payable

$ 240,000

$ 160,000

Dividends payable

-0-

40,000

Bonds payable

400,000

-0-

Common stock ($10 par)

1,520,000

1,200,000

Retained earnings

540,000

280,000

 

$2,700,000

$1,680,000

Additional data:

 

Market value of stock at 12/31/08 is $80 per share.

 

James sold 32,000 shares of common stock at par on July 1, 2008.

James Company

Condensed Income Statement

For the Year Ended December 31, 2008

 

Sales

$2,400,000

 

Cost of goods sold

1,600,000

 

Gross profit

800,000

 

Administrative and selling expense

500,000

 

Net income

$ 300,000

Instructions
Compute the following financial ratios by placing the proper amounts in the parentheses provided for numerators and denominators.

*Ex. 24-90 (cont.)

a.

Current ratio at 12/31/08

(

)

 

 

(

)

b.

Acid test ratio at 12/31/08

(

)

 

 

(

)

c.

Receivables turnover in 2008

(

)

 

 

(

)

d.

Inventory turnover in 2008

(

)

 

 

(

)

e.

Profit margin on sales in 2008

(

)

 

 

(

)

f.

Earnings per share in 2008

(

)

 

 

(

)

g.

Rate of return on common stock equity in 2008

(

)

 

 

(

)

h.

Price earnings ratio at 12/31/08

(

)

 

 

(

)

i.

Debt to total assets at 12/31/08

(

)

 

 

(

)

j.

Book value per share at 12/31/08

(

)

 

 

(

)

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