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FINAL EXAM:ACC/400

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FINAL EXAM: ACC/400

S. Duhn

The condensed financial statements of Westward Corporation for 2006 are presented below.

 

Westward Corporation                                                Westward Corporation

Balance Sheet                                                         Income Statement

December 31, 2006                                   For the Year Ended December 31, 2006

 

Assets                                                 Revenues                                       $2,000,000

Current assets                                                          Expenses

Cash and temporary                                              Cost of goods sold                       1,080,000

investments                             $   30,000              Selling and administrative

Accounts receivable                      70,000                expenses                                       495,000

Inventories                                   120,000              Interest expense                               30,000

Total current assets               220,000                  Total expenses                        1,605,000

Property, plant, and                                                 Income before income taxes              395,000

equipment (net)                            780,000         Income tax expense                            140,000

Total assets                       $1,000,000         Net income                                     $   255,000

 

Liabilities and Stockholders’ Equity

Current liabilities                             $    80,000

Long-term liabilities                            300,000

Common stockholders’ equity           620,000

Total liabilities and

stockholders’ equity                $1,000,000

 

 

 

 

 


Westward Corporation                                                               Westward Corporation

Balance Sheet                                                         Income Statement

December 31, 2005                                   For the Year Ended December 31, 2005

 

Assets                                                 Revenues                                       $2,500,000

Current assets                                                          Expenses

Cash and temporary                                              Cost of goods sold                       1,750,000

investments                             $   40,000              Selling and administrative

Accounts receivable                      90,000                expenses                                       500,000

Inventories                                   150,000              Interest expense                               30,000

Total current assets               280,000                  Total expenses                        2,280,000

Property, plant, and                                                 Income before income taxes              220,000

equipment (net)                            800,000         Income tax expense                              77,000

Total assets                       $1,080,000         Net income                                     $   143,000

 

Liabilities and Stockholders’ Equity

Current liabilities                           $    140,000

Long-term liabilities                            320,000

Common stockholders’ equity           620,000

Total liabilities and

stockholders’ equity                $1,080,000

 

Additional data as of December 31, 2004: Inventory = $100,000; Total assets = $900,000; Common stockholders’ equity = $540,000.

 

Instructions

  1. Compute the following listed ratios for 2006 and 2005 showing supporting calculations.

 

(a)   Current ratio = ___________________________________________________________ .

 

(b)   Debt to total assets = _____________________________________________________ .

 

(c)   Times interest earned = ___________________________________________________ .

 

(d)   Inventory turnover = ______________________________________________________ .

 

(e)   Profit margin ratio = ______________________________________________________ .

 

(f)    Return on common stockholders’ equity = ____________________________________ .

 

(g)   Return on assets = _______________________________________________________ .

 

 

  1. Perform horizontal and vertical analysis on Westward both income statement and balance sheet, show your results.
  2. Assess the financial performance of Westward, given the analysis tools used above.

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