ACC 400 FINAL EXAMThe condensed financial statements of Westward Corporation for 2009 and 2008 are presented below.
Westward Corporation Westward CorporationBalance Sheet Income StatementDecember 31, 2009 For the Year Ended December 31, 2009
Assets Revenues $2,000,000Current assets ExpensesCash and temporary Cost of goods sold 1,080,000investments $ 30,000Selling and administrativeAccounts receivable 70,000Expenses 495,000Inventories 120,000Interest expense 30,000Total current assets 220,000Total expenses 1,605,000Property, plant, and Incomebefore income taxes 395,000equipment (net) 780,000Income tax expense 140,000Total assets $1,000,000Net income $ 255,000
Liabilities and Stockholders’ EquityCurrent liabilities $ 80,000Long-term liabilities 300,000Common stockholders’ equity 620,000Total liabilities and stockholders’ equity $1,000,000
Westward Corporation Westward CorporationBalance Sheet Income StatementDecember 31, 2008 For the Year Ended December 31, 2008
Assets Revenues $2,500,000Current assets ExpensesCash and temporary Cost of goods sold 1,750,000investments $ 40,000Selling and administrativeAccounts receivable 90,000Expenses 500,000Inventories 150,000Interest expense 30,000Total current assets 280,000Total expenses 2,280,000Property, plant, and Income before income taxes 220,000equipment (net) 800,000Income tax expense 77,000Total assets $1,080,000Net income $ 143,000
Liabilities and Stockholders’ EquityCurrent liabilities $ 140,000Long-term liabilities 320,000Common stockholders’ equity 620,000Total liabilities andstockholders’ equity $1,080,000
Select data from fiscal year 2007:
Inventory: $100,000Total assets: $900,000Stockholders’ Equity: $540,000
Instructions
1. Compute the following listed ratios for 2009 and 2008 showing supporting calculations. (5.2 points)a. Current ratiob. Debt to total Assetsc. Times interest earnedd. Inventory turnovere. Profit margin ratiof. Return on common stockholders’ equityg. Return on assets
2. Perform horizontal and vertical analysis on Westward’s financial statements, show your results. (3.0 points)
3. Assess the financial performance of Westward, given the analysis tools used in questions 1 and 2 above. (5.3 points)
4. If the company wanted to perform industry comparison analysis, what references would you recommend it use? (1.5 points)