The financial statements of the Precious Company appear below:

PRECIOUS COMPANY

Comparative Balance Sheet December 31,

_________________________________________________________________________

PRECIOUS COMPANY

Income Statement

For the Year Ended December 31, 2020

Additional information:

1. Cash dividends of $50,000 were declared and paid on common stock in 2020.
2. Weighted-average number of shares of common stock outstanding during 2020 was 50,000 shares.
3. Market price of common stock on December 31, 2020, was $16 per share.
4. Net cash provided by operating activities for 2020 was $70,000.

Required

Using the financial statements and additional information above, compute the following ratios for the Precious Company for 2020. Show all formulas and computations.

1. Current ratio .
2. Return on common stockholders' equity .
3. Price-earnings ratio .
4. Inventory turnover .
5. Accounts receivable turnover .
6. Times interest earned .
7. Profit margin .
8. Days in inventory .
9. Payout ratio .
10. Return on assets .

The end of the assignment

CEOs are hired to maximize the present value of the firm. To date, we have explored some of the challenges associated with this conflicting endeavor. The emphasis on short-term gains at the expense of long-term vitality is real. The President of the US stated that he wanted to open the country back up for business by Easter Sunday. What is more, Liberty University President just announed on 3/25/20 that he is opening the school back up to some 5,000 students. Your assignment is to evaluate our current economic model and capital market structure to determine if CEOs have the proper incentives to do the right thing for their shareholders. Are compensation models encouraging CEOs to take more risks than warranted?

You have obtained the fi nancial statements of Day Manufacturing and Night Production, two companies

in the manufacturing industry. You have acquired the following information for an analysis of the companies

(amounts in thousands):

Day Manufacturing Night Production

2020 2019 2020 2019

Cash $ 24 $ 21 $ 37 $ 35

Accounts receivable 273 196 280 230

Inventory 182 140 154 120

Prepaid expenses 7 6 5 7

Capital assets (net) 480 400 322 224

Current liabilities 154 175 170 140

Long-term debt 280 308 288 236

Share capital—common shares 140 140 120 120

Retained earnings 392 140 220 120

Sales (all credit sales) 2,660 1,820 1,750 1,680

Cost of goods sold 1,750 1,260 1,274 1,260

Interest expense 28 31 29 24

Taxes (30%) 108 78 90 78

Net income 252 182 210 182

a. Calculate the following ratios for the two companies for the two years. For 2019, assume the current

year amount is equal to the average where required.

i. Current ratio

ii. Accounts receivable turnover

iii. Inventory turnover

iv. Debt to equity

v. Interest coverage

vi. Gross margin

vii. Profi t margin

viii. Return on assets

ix. Return on equity

b. Write a brief analysis of the two companies based on the information given and the ratios calculated.

Be sure to discuss issues of short-term liquidity, activity, solvency, and profi tability. Which

company appears to be the better investment for the shareholder? Explain. Which company appears

to be the better credit risk for the lender? Explain. Is there any other information you would like to

have to complete your analysis?

Crane Company issues $5040000, 7%, 5-year bonds dated January 1, 2020 on January 1, 2020. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 6%. What are the proceeds from the bond issue?

Easy on the Wallet or Easy on the Earth: A Case About Ethics in Sourcing

Meghan Skarzynski

Fashionforward! is an online auction site where those who have more style than money can bid on designer apparel. The site registers members for $30, who are then allowed to bid on exceptional deals. In an effort to stand out from the crowded field of online bargain sites, Fashionforward! reached out to the local community in search of help marketing their company to college students.

Part of this effort included hiring a student intern, Carly LeBlanc. At that point, Fashionforward! had no formal marketing strategy for targeting consumers. As someone who grew up in the digital age, LeBlanc knew she had to kick start the company on the Internet. Her marketing knowledge centered on the benefits of viral technologies, especially Facebook and Twitter.

LeBlanc immediately revamped the Fashionforward! Facebook page to make it more user-friendly--adding quizzes, polls, discussion boards, and photo albums--as well as setting Twitter blasts to go off repeatedly throughout the day. During her three-month internship, LeBlanc quadrupled the Fashionforward! Facebook fan base. Her project helped catapult the company into prominence. In the three months of her internship, Fashionforward! increased the number of items offered on the site threefold.

The CEO noticed LeBlanc's success in social networking and asked her to launch a guerrilla marketing campaign on her own campus to create buzz for Fashionforward! among her peers. The CEO challenged her to register 100 new clients within the week.

A member of a sorority since her freshman year, LeBlanc decided to use her Greek connections. She appeared at four campus sororities that week. Promising a free Fashionforward! T-shirt with the sorority's name for every membership purchased, LeBlanc registered 300 new members in one night.

Reporting to work the next day, LeBlanc was excited to share with the team the quick acceptance Fashionforward! had received on campus. She believed she had developed an easy and effective marketing strategy that could be replicated at schools all over the country. LeBlanc planned to order different T-shirt designs for different sororities, highlighting the Fashionforward! logo in bold lettering.

That's when she faced a difficult ethical decision: She could order the shirts from a low-cost company in China or she could order them from a fair-trade company in San Francisco, which provided safe conditions and higher wages for the workers who made the clothing. The fair trade shirts were $28.65,making the grand total for her project $8,595. In contrast, the Chinese T-shirts were $5.50 each, and the company's Web site promised fast and free delivery for a grand total of $1,100.

LeBlanc remembered from her Venture Capital Finance class that startup companies need to focus on making the most money during the first two years. She also knew that the T-shirts from China would be cheaper so that she could create a more elaborate design with more graphics and color. She realized her school was a "testing campus" for Fashionforward! and that if her marketing module worked, her internship work would spread to other college campuses. She thought of how easy it would be for a factory in China to produce large quantities of shirts to give away for free as a promotion that she could promote on the Facebook page she had worked so hard on. She also wondered if the higher cost of the T-shirts would affect the grade the CEO gave her for the internship.

On the other hand, her International Management class had exposed her to the harsh reality of working conditions in China: low wages, rigorous work schedule, poor safety regulations, and the complete lack of worker's compensation and benefits. When LeBlanc had sailed on the Human Rights and Social Justice Voyage with University of Virginia's Semester at Sea, she saw first-hand a Bulgarian clothing factory's destitute environment. She wasn't sure how the public would react if they knew Passionita had taken advantage of outsourcing cheaper t-shirts rather than supporting a U.S. company during the global recession.

Then LeBlanc weighed her other option of ordering t-shirts from a San Francisco T-shirt company she had already used once when she worked with a community service student organization. While the shirts were more expensive, they were fair-trade, organic, and eco-friendly, all attributes she thought would appeal to students. LeBlanc reasoned students would be more likely to wear a shirt that was fashionable and better quality than one that was made cheaply.

LeBlanc didn't want to disappoint her boss. She knew she was working on a deadline and didn't have time to research the prices of T-shirts at other companies. Even though she could have created a bidding war with local T-shirt companies for the business, she preferred to buy from a company that she could trust. At the same time, the $7,495 she would save if she bought from the Chinese manufacturer was too good not to consider. She knew if she made her boss happy, she'd be promoted and enjoy more independence with her future projects.

LeBlanc wants Fashionforward! to increase its popularity and become a topnotch company among college trendsetters. What should she do and why?

1. Should she quit her internship and drop the class?

2. Should she ask for an extension on her assignment?

3. Should she order the T-shirts from a fair trade company?

4. Should she assume the Chinese company doesn't treat its workers fairly?

Answer the four Discussion Questions below here, to present detailed answers.

Our firm purchased equipment for US$100,000 on Dec 1, 2015. Our year end is December 31, and the payable is due on Jan 31, 2016. On December 1, 2015, we entered into a forward exchange contract with the bank to provide us with the US dollars on January 31, 2016.

The following rates were in effect:

Forward Rates:

Dec1,2015; 60 day forward rate US$1= CDN$1.152

Dec 31, 2015; 30 day forward rate US$1 = CDN$ 1.162

Spot rates

Dec 1, 2015 US$1 = CDN$ 1.130

Dec 31, 2015 US$1 = CDN$ 1.16

Jan 31, 2016 US$1 = CDN$ 1.210

Prepare all the journal entries arising from this transaction, from original sale to final settlement.

What does it say about the leadership of Mr. Siegel that he called each person individually via videoconference? What are the ripple effects that this story will likely have throughout his company, to ZipRecruiter's customers, and the industry in which it operates?

This is the reading:

The toll the new coronavirus has taken on an economy that was healthy at the start of March came into clear relief when the government said Thursday that 6.6 million Americans had applied for unemployment benefits the week before.

No one weeps for the corporate bosses behind the decisions to lay off many of those people, but these bosses are struggling as they make the toughest calls of their careers. Marriott International Inc.'s CEO told analysts this surpasses the magnitude of 9/11 and the 2008 financial crisis combined. In a letter to employees , General Electric Co.'s CEO said this is an era where the unknowns outweigh the knowns.

Business leaders live by the calendar, attaching forecasts, projects and goals to a specific date or period of time. No one knows when state-issued mandates to stay at home will lift, and that renders a calendar about as useful in 2020 as an eight-track player. It is like stumbling around in the dark.

As quarterly earnings conference calls take place in the coming weeks, expect to hear a lot of "we don't know," "it's hard to say," and "I wish I had a crystal ball." These terms aren't typical for the managing class.

"CEOs are wired to take action," Jerry Colonna , a former venture capitalist who now counsels top executives, told me this week. "It's really hard when they don't really know what action to take. It's like taking a bucket to extinguish a fire and not knowing if the bucket is full of water or confetti."

Bahram Akradi, the Iranian-born founder of the Life Time Inc. health-club chain , is one of those CEOs looking for water in the bucket. I've talked with Mr. Akradi often in recent weeks about how his company is navigating the crisis.

The answer: It isn't pretty. Revenue has all but dried up, nearly $1 billion in new developments are on ice. "These are the facts," he told me during a Wednesday FaceTime session from his Chanhassen, Minn., office. "Empty parking lots are a fact."

Like many honchos I talk to, Mr. Akradi would like political leaders to set a firm date to reopen businesses and end rigid sheltering rules—even if that date is several weeks in the future. He also wants everyone's bills across the country to be postponed in April. For instance, mortgages or car payments due this month should be deferred to May.

Topping the list of concerns Mr. Akradi can control: the 38,000 people on his payroll. He likens Life Time to a boat in troubled waters. "We are in a big, massive storm," he told employees March 25. "We have no idea how long the storm is, or how bad it's going to get. What I'm trying to do is make sure I keep everybody on this ship staying intact and alive. That's all."

Eight days before, when he closed more than 150 clubs in 30 states, he recorded a video message telling employees Life Time could weather a two-week shutdown without breaking much of a sweat. After that, he'd have to get creative.

Last week came another video in which he had to explain why roughly 36,000, or about 90%, of employees were going on furlough as of Wednesday. The move included a commitment to pay 100% of affected workers' insurance premiums and an extra $10 million for a fund to help employees with essentials that unemployment checks won't cover.

This isn't how he wants it. "They've been with me 28 years, busting their rear ends." Now he's encouraging them to buy only the basics and try, if necessary, to negotiate favorable terms with potential creditors.

Mr. Akradi, 58, cut jobs before , during the financial crisis when a slowdown in discretionary income slammed several industries, including fitness. Even cutting under 200 jobs "felt like death, the ugliest thing I've had to do in my life." How much worse is it this time? "It is not even in the same orbit."

The day after my last chat with Mr. Akradi, I talked by phone with ZipRecruiter Inc. founder and CEO Ian Siegel as he kept an eye on two children at his home in Southern California. Mr. Siegel's had just finished a roller-coaster of a month that included laying off or indefinitely furloughing 500 people, roughly a third of the staff.

"All the way up to March 9 we were in a boom economy, and then literally overnight we were in a recession economy." Job seekers use ZipRecruiter to search and apply for jobs posted by companies on its website. Not all hiring has stopped, but listings rapidly declined starting March 10.

He had to decide whether the abrupt decline was a "shock to the system or the new normal." Without an accurate compass, he decided to plan for the worst-case scenario. "We knew we were going to have to make hard choices fast or harder choices later." He intentionally cut to the bone.

Mr. Siegel, 46, and his management team took about a week to figure out what to do. Keeping 700 employees would be manageable considering the company's liquidity and revenue levels. It likely gives ZipRecruiter enough head count to pivot back to growth if there is a sharp boost in hiring at the end of this crisis.

The process was gut wrenching; "definitely the hardest decision I've had to make." Mr. Siegel informed each displaced employee individually via videoconference, making it clear that each one was considered valuable. He hopes to rehire many of them.

Here's an important thing Mr. Siegel takes away from this process: A red hot startup like the decade-old ZipRecruiter can be sobered at a moment's notice.

"I really thought we were hardened, that we were operationally invulnerable," he said. The steps he took last month were "humbling."

These CEOs believe they will emerge and their businesses will eventually resemble what they looked like a month ago. Mr. Siegel said making necessary cuts now means the enterprise can continue to live another day and Mr. Akradi says CEOs like him are as crafty as they are tenacious.

"I'm never going to be faster than the bear," Mr. Akradi told me. "I just have to be faster than a lot of other folks."

Good advice, but outrunning the other guy just got a lot harder to do.

Comparative financial statements for The Cullumber Company Ltd. are shown below.

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Comparative financial statements for The Cullumber Company Ltd. are shown below.

Additional information:

Calculate all possible liquidity, solvency, and profitability ratios for 2021. (Round answers for Collection period, Days sales in inventory, Operating cycle and Free cash flow to 0 decimal places, e.g. 125. Round answer for Earnings per share to 2 decimal places, e.g. 12.56. Round all other answers to 1 decimal place, e.g. 12.5 or 12.5%. )