Mbaln-612 financial and managerial accounting midterm

Question

Financial and Managerial Accounting Midterm Examination- Financial Statement Analysis

Part 1 - Financial Analysis

The condensed financial statements of Aries Company for the years 20X5 and 20X6 are presented below.

Aries Company Balance Sheet December 31
	20X6	20X5
Current Assets
Cash and Equivalents	£60	£160
Accounts Receivable (net)	720	640
Inventory	1080	800
Prepaid Expenses	60	80
Total Current Assets	1920	1680
Property, Plant and Equipment	1520	1400
Investments	20	20
Intangibles and Other Assets	770	640
Total Assets	4230	3740
Current Liabilities	520	420
Long-Term Liabilities	1720	1440
Stockholders' Equity--common	1990	1880
Total Liabilities and Stockholders' Equity	4230	3740

 

Aries Company Income Statements For the Years Ended December 31
	20X6	20X5
Sales Revenue	£6,000	£5,740
Cost and Expenses
Cost of Goods Sold	4920	4720
Selling and Administrative Expenses	560	500
Interest Expense	160	140
Total Costs and Expenses	5,640	5,360
Income Before Income Tax	360	380
Income Tax Expense	140	150
Net Income	£ 220	£ 230

Compute the following ratios for 20X6 and 20X5.

(a) Current ratio.

(b) Inventory turnover. (Inventory on 12/31/X4 was £652.)

(c) Profit margin ratio.

(d) Return on assets. (Assets on 12/31/X4 were £3,480.)

(e) Return on common stockholders' equity. (Stockholders' equity on 12/31/X4 was £1760.)

(f) Debt to total assets ratio.

(g) Times interest earned.

Critically evaluate your ratio calculations and conclude on the current state of the company.

Word count 500 (+/- 10%)

Part 2 - Performance Evaluation

Evaluate the financial performance of a company of your choosing using the knowledge and technical skills that you have gained during the course so far. Provide a theoretical explanation of any ratio analysis. No need to recalculate ratios, often the financial reports provides these.

Attach the company financial statements as an appendix to your statement as reference to your work.

Present your findings in a Management Business Report wordage should be 1500 +/10%.