Question
In: Finance
Finance date of Adams Stores, Inc. for the year ending 2016 and 2017. Items 2016 2017...
Finance date of Adams Stores, Inc. for the year ending 2016 and 2017. Items 2016 2017 Sales $3,432,000 $5,834,400 Cash 9,000 7,282 Other Expenses 340,000 720,000 Retained Earnings 203,768 97,632 Long-term debt 323,432 1,000,000 Cost of goods sold 2,864,000 4,980,000 Depreciation 18,900 116,960 Short-term investments 48,600 20,000 Fixed Assets 491,000 1,202,950 Interest Expenses 62,500 176,000 Shares outstanding (par value = $46.00) 100,000 100,000 Market Price of stock 8.50 6 Accounts Receivable 351,200 632,160 Accounts payable 145,600 324,000 Inventory 715,200 1,287,360 Notes Payable 200,000 720,000 Accumulated Depreciation 146,200 263,160 Accruals 136,000 284,960 Tax Rate 40% 40% Instructions: As a group, complete the following activities using the financial information above:
Need answer for this question please!
A. Based on your financial statements (from Part 1), calculate the following ratios for the two years. Show all your calculations in good form. Show your formulas. If you use excel, each calculation need to show the excel formula Current ratio Quick ratio Inventory turnover (times) Average collection period (days) Total asset turnover (times) Debt ratio Times interest earned Gross profit margin Net profit margin Return on total assets Return on equity P/E ratio Return on equity using DuPont Analysis
Solutions
Expert Solution
| Adam Stores, Inc | ||
| Income Statement | Year 2016 | Year 2017 |
| Sales | $ 3,432,000 | $ 5,834,400 |
| COGS | $ 2,864,000 | $ 4,980,000 |
| Gross Profit | $ 568,000 | $ 854,400 |
| Other Expenses | $ 340,000 | $ 720,000 |
| Depreciation | $ 18,900 | $ 116,960 |
| EBIT | $ 209,100 | $ 17,440 |
| Interest Expenses | $ 62,500 | $ 176,000 |
| EBT | $ 146,600 | $ (158,560) |
| Tax @40% | $ 58,640 | $ (63,424) |
| PAT | $ 87,960 | $ (95,136) |
| No of shares outstanding | 100,000 | 100,000 |
| EPS= | $ 0.88 | $ (0.95) |
| Adam Stores, Inc | |||||
| Balance sheet | |||||
| Assets | Year 2016 | Year 2017 | Liabilities & Equity | Year 2016 | Year 2017 |
| Current Assets | Current Liabilitues | ||||
| Cash | $ 9,000 | $ 7,282 | Accounts Payable | $ 145,600 | $ 324,000 |
| Accounts Receivable | $ 351,200 | $ 632,160 | Notes Payable | $ 200,000 | $ 720,000 |
| Short term Investments | $ 48,600 | $ 20,000 | Accruals | $ 136,000 | $ 284,960 |
| Inventory | $ 715,200 | $ 1,287,360 | Total Current Liabilities | $ 481,600 | $ 1,328,960 |
| Total current Assets | $ 1,124,000 | $ 1,946,802 | |||
| Long term debt | $ 323,432 | $ 1,000,000 | |||
| Fixed Assets | |||||
| Fixed Assets | $ 491,000 | $ 1,202,950 | Equity | ||
| Accumulated depreciation | $ (146,200) | $ (263,160) | Shares outstanding(par value$4.6) | $ 460,000 | $ 460,000 |
| Net Fixed Assets | $ 344,800 | $ 939,790 | Retained Earnings | $ 203,768 | $ 97,632 |
| Total Equity | $ 663,768 | $ 557,632 | |||
| Total Assets | $ 1,468,800 | $ 2,886,592 | Total Liability & Equity | $ 1,468,800 | $ 2,886,592 |
| Calculation | Result | ||||
| Ratios | Formula | Year 2016 | Year 2017 | Year 2016 | Year 2017 |
| Current Ratio | Current Asset/Current Liabilities | =1124000/481600 | =1946802/1328960 | 2.33 | 1.46 |
| Quick Ratio | (current Asset-Inventory)/Current Liabilities | =(1124000-715200)/481600 | =(1946802-1287360)/1328960 | 0.85 | 0.50 |
| Inventory Turnover | =COGS/Inventory | =2864000/715200 | =4980000/1287360 | 4.00 | 3.87 |
| Collection days | = Sales /AR | =3432000/351200 | =5834400/632160 | 9.77 | 9.23 |
| Total Asset Turnover | =Sales /Total Assets | =3432000/1468800 | =5834400/2886592 | 2.34 | 2.02 |
| Debt Ratio | =Debt/Total Asset | =323432/1468800 | =1000000/2886592 | 0.22 | 0.35 |
| Times Interest Earned | = Interest Expense /EBIT | =62500/209100 | =176000/17440 | 0.30 | 10.09 |
| Gross Profit Margin | =Gross Profit/Sales | =568000/3432000 | =854400/5834400 | 16.55% | 14.64% |
| Net Profit Margin | = Net Profit/Sales | =87960/3432000 | =-95136/5834400 | 2.56% | -1.63% |
| Return on Total Assets | = Net Profit/Total Assets | =87960/1468800 | =-95136/2886592 | 5.99% | -3.30% |
| Return on Equity | = Net Profit/Total Equity | =87960/663768 | =-95136/557632 | 13.25% | -17.06% |
| P/E Ratio | =Market Price per share/EPS | =8.5/0.88 | =6/(-0.95) | 9.66 | (6.32) |
| Du Pont Ratio | |||||
| Equity Multiplier = | =Total Assets/Total Equity= | =1468800/663768 | =2886592/557632 | 2.21 | 5.18 |
| Du Pont Ratio=Net Margin *Asset Turnover*Equity Multiplier | =2.56%*2.34*2.21 | =-1.63%*2.02*5.18 | 13.24% |
 jeff jeffy answered 2 years agoRelated SolutionsThe following information was taken from the records of Adams, Inc.. 2016 2017 ASSETS: Cash ...The following information was taken from the records of Adams,
Inc..
2016
2017
ASSETS:
Cash $ 25,000
$ 43,000
Accounts Receivable 120,500
115,000
Prepaid Rent 3,000 4,000
Accounts Payable 89,000 95,000
Utilities Payable 8,000 6,500
Income Statement
For the Year ended December 31, 2017
REvenue $ 160,000
Expenses:
Operating Expenses $ 123,000
Utilities Expenses 12,000
Rent Expense 16,000 (151,000
Net Income $ 9,000
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Dec. 31, 2016
Dec. 31, 2017
Accounts receivable
33.0
36.5
Inventories
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30.5
Accounts payable
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26.5
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Robots, Inc.
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2016
Current assets
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$ 153,010
$ 538,489
Accounts receivable, net of allowance for doubtful accounts of
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1,627,980
2,596,291
Inventories (Note 2)
1,340,494
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123,388
90,592
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—
32,815
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Comparative Balance Sheets
June 30, 2017 and 2016
2017
2016
Assets
Cash
$
92,500
$
69,000
Accounts receivable, net
102,500
76,000
Inventory
88,800
124,000
Prepaid expenses
6,900
10,400
Total current assets
290,700
279,400
Equipment
149,000
140,000
Accum.
depreciation—Equipment
(39,500
)
(21,500
)
Total assets
$
400,200
$
397,900
Liabilities and Equity
Accounts payable
$
50,000
$
67,500
Wages payable
8,500
20,000
Income taxes payable
5,900
8,800
Total current liabilities
64,400
96,300
Notes payable (long term)
55,000
85,000
Total...
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June 30, 2017 and 2016
2017
2016
Assets
Cash
$
92,500
$
69,000
Accounts receivable, net
102,500
76,000
Inventory
88,800
124,000
Prepaid expenses
6,900
10,400
Total current assets
290,700
279,400
Equipment
149,000
140,000
Accum.
depreciation—Equipment
(39,500
)
(21,500
)
Total assets
$
400,200
$
397,900
Liabilities and Equity
Accounts payable
$
50,000
$
67,500
Wages payable
8,500
20,000
Income taxes payable
5,900
8,800
Total current liabilities
64,400
96,300
Notes payable (long term)
55,000
85,000
Total...
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June 30, 2017 and 2016
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2016
Assets
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$
93,100
$
68,000
Accounts receivable, net
101,000
75,000
Inventory
87,800
122,500
Prepaid expenses
6,800
10,200
Total current assets
288,700
275,700
Equipment
148,000
139,000
Accum.
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(21,000
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397,700
$
393,700
Liabilities and Equity
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$
49,000
$
66,000
Wages payable
8,400
19,800
Income taxes payable
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8,600
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94,400
Notes payable (long term)
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84,000
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