Finance - FinalQuiz

Finance

Q: The following summaries from the income statements and balance sheets of Kouris Company and Brittania, Inc. are presented below. (1) For both companies for 2016, compute the: (a) Current ratio (b) Acid-test ratio (c) Accounts receivable turnover (d) Inventory turnover (e) Days' sales in inventory (f) Days' sales uncollected Which company do you consider to be the better short-term credit risk? Explain. (2) For both companies for 2016, compute the: (a) Profit margin ratio (b) Return on total assets (c) Return on common stockholders' equity Which company do you consider to have better profitability ratios? Kouris Company Consolidated Balance Sheets (in millions) May 31 2016 2015 Assets Current assets: Cash and cash equivalents $ 634.0 $575.5 Accounts receivable, net of allowance 2,101.1 1,804.1 Inventories 1,514.9 1,373.8 Other current assets 429.9 401.3 Total current assets 4,679.9 4,154.7 Property, plant, and equipment, net 1,620.8 1,614.5 Other long term assets 413.2 670.8 Total assets $6,713.9 $6,440.0 Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $ 205.7 $ 55.3 Notes payable 75.4 425.2 Accounts payable 572.7 504.4 Accrued liabilities 1,054.2 765.3 Income taxes payable 107.2 83.0 Total current liabilities 2,015.2 1,833.2 Long term liabilities 708.0 767.8 Total liabilities 2,723.2 2,601.0 Stockholders' equity: Common stock 2.8 2.8 Contributed capital in excess of par value 589.0 538.7 Unearned stock compensation (0.6) (5.1) Accumulated other comprehensive loss (239.7) (192.4) Retained earnings 3,639.2 3,495.0 Total stockholders' equity 3,990.7 3,839.0 Total liabilities and stockholders' equity $6,713.9 $6,440.0 Kouris Company Consolidated Statement of Income May 31, 2016 (in millions) Revenues $10,697.0 Cost of sales 6,313.6 Gross profit 4,383.4 Operating expenses 3,137.6 Operating income 1,245.8 Interest expense 42.9 Other revenues and expenses 79.9 Income before tax 1,123.0 Income taxes 382.9 Income before effect of accounting change 740.1 Cumulative effect of accounting change, net of tax 266.1 Net income $ 474.0 Brittania, Inc. Consolidated Balance Sheets Jan. 3, Jan. 4, 2016 2015 Assets Current assets: Cash and cash equivalents $34.5 $22.2 Accounts receivable, net of allowance 15.5 14.7 Inventories 27.2 28.4 Other current assets 3.5 4.2 Total current assets 80.7 69.5 Property, plant, and equipment, net 5.7 7.0 Other long term assets 1.1 1.5 Total assets $87.5 $78.0 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 8.5 $ 6.6 Accrued liabilities 7.8 5.6 Total current liabilities 16.3 12.2 Long term liabilities 2.5 2.6 Total liabilities 18.8 14.8 Stockholders' equity: Common stock 2.3 2.3 Contributed capital in excess of par value 17.8 17.4 Unearned stock compensation (0.1) (0.5) Accumulated other comprehensive loss (0.9) (1.3) Treasury stock (6.3) (5.4) Retained earnings 55.9 50.7 Total stockholders' equity 68.7 63.2 Total liabilities and stockholders' equity $87.5 $78.0 Brittania, Inc. Consolidated Statement of Income January 3, 2016 (in millions) Revenues $133.5 Cost of sales 87.3 Gross profit 46.2 Operating expenses 37.3 Operating income 8.9 Interest expense (0.1) Other revenues and expenses 0.3 Income before tax 9.1 Income taxes 3.9 Net income $ 5.2

1 2 3 … 2,046 Next »