2.
Waggoner Company
Income Statement
For the Year Ended December 31, 2011
(in dollars)
Revenues:
Service Revenues $587,000 $587,000
Expenses:
Wages Expense 355,000
Service Expense 195,000
Interest Expense 3,000
Total Expenses 553,000
Pretax Income 34,000
Income Tax Expense 11,900
Net Income $22,100
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Modify RemoveQuestion The following selected financial data pertain to four companies: a hotel, a travel agency, a meat packing company and a pharmaceutical
company.
Required: Match each with the financial information and explain why you made your choice as you did.
Company
Company 3 Company 4
Balance Sheet Data
1
(component percentages)
2
Cash 7.2 22.0 6.0 11.2
Accounts Receivable 28.0 40.0 3.4 23.0
Inventory 21.4 0.5 0.9 27.4
Property, Plant & Equipment 32.0 19.0 75.1 25.0
Income Statement Data
Gross Profit 15.2 Not Applicable Not Applicable 44.0
Profit before Taxes 1.8 3.3 2.5 7.0
Ratios
Current ratio (over the last five years) 1.6 1.3 0.5 1.8
Inventory turnover ratio 27.8 Not Applicable Not Applicable 3.4
Debt-to-equity ratio 1.8 2.3 5.8 1.4
Answer Company 1: Meat packing company (high inventory turnover)
Company 2: Travel agency (no gross profit and essentially no inventory, but has high receivables)
Company 3: Hotel (high property & equipment, but no gross profit or essentially no inventory)
Company 4: Pharmaceutical company (high gross profit, but low inventory turnover and low debt)
Question Nickel Industries reported the following amounts on its balance sheet on December 31, 2011:
Cash $180,000
Notes payable 100,000
Inventory 325,000
Contributed Capital 750,000
Net Property, Plant & Equipment 600,000
Accounts Receivable 30,000
Accounts Payable 75,000
Retained Earnings ?
Required:
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