These two companies are in the same business and state but different cities. Each company has been inoperation for about 10 years. Both companies received an unqualified audit opinion on the financialstatements. Thor Company wants to borrow $95,000 and Gunnar Company is asking for $26,000. Theloans will be for a two-year period. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the year's average and all sales are on account.Required:Calculate the following ratios. (Use 365 days in a year. Round your intermediate calculations and finalanswers to 2 decimal places.)ВookPrintThorGunnarRatioerencesCompanyCompanyTests of Profitability:1.Net Profit Margin%%2. Gross Profit Percentage%%3.Fixed Asset Turnover4. Return on Equity%%5. Earnings per Share6. Price/Earnings RatioTests of Liquidity:7. Receivables TurnoverDays to Collectdaysdays8. Inventory TurnoverDays to SelldaysdaysCurrent RatioTests of Solvency:10. Debt-to-Assets Ratio The financial statements for Thor and Gunnar companies are summarized here:ThorGunnartsCompanyCompanyBalance SheetCash$$ 63,200Accounts Receivable, NetInventoryEquipment, NetOther Assets25,00067,000134,000750,000186,000$1,162,00018,00010,000172,00058,400$321,600eBookPrintTotal Assets$ 148,000246,000662,00060,00046,000$1,162,000$ 17,00046,000242,0009,0007,600Current LiabilitiesNote Payable (long-term) (12% interest rate)Common Stock (par $20)Additional Paid-in CapitalRetained EarningsferencesTotal Liabilities and Stockholders' Equity$321,600Income StatementSales Revenue$1,090,000662,000326,000$ 102,000$306,000170,000104,000$ 32,000Cost of Goods SoldOther ExpensesNet IncomeOther DataPer share price at end of year13.60$30.00Selected Data from Previous YearAccounts Receivable, NetInventoryEquipment, NetNote Payable (long-term) (12% interest rate)Total Stockholders' Equity55,800123,000750,000246,000768,000$ 17,20035,600172,00046,000258,600

Name: These two companies are in the same business and state but different
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Description: These two companies are in the same business and state but different cities. Each company has been inoperation for about 10 years. Both companies received an unqualified audit opinion on the financialstatements. Thor Company wants to borrow $95,000

Business

Accounting

The financial statements for Thor and Gunnar companies are summarized he Thor Gunnar Company Company Balance Sheet Cash 25,000 $ 63,200 Accounts Receivable, Net Inventory Equipment, Net Other Assets 67,000 134,000 750,000 186,000 $1,162,000 18,000 10,000 172,000 58,400 $321,600 Total Assets $ 148,000 246,000 662,000 60,000 46,000 $1,162,000 $ 17,000 46,000 242,000 9,000 7,600 $321,600 Current Liabilities Note Payable (long-term) (12% interest rate) Common Stock (par $20) Additional Paid-in Capital Retained Earnings Total Liabilities and Stockholders' Equity Income Statement $306,000 170,000 104,000 Sales Revenue $1,090,000 662,000 326,000 $ 102,000 $ 32,000 Cost of Goods Sold Other Expenses Net Income Other Data Per share price at end of year $ 13.60 $ 30.00 Selected Data from Previous Year Accounts Receivable, Net Inventory Equipment, Net Note Payable (long-term) (12% interest rate) Total Stockholders' Equity $ 17,200 35,600 172,000 46,000 258,600 $ 55,800 123,000 750,000 246,000 768,000

The financial statements for Thor and Gunnar companies are summarized he Thor Gunnar Company Company Balance Sheet Cash 25,000 $ 63,200 Accounts Receivable, Net Inventory Equipment, Net Other Assets 67,000 134,000 750,000 186,000 $1,162,000 18,000 10,000 172,000 58,400 $321,600 Total Assets $ 148,000 246,000 662,000 60,000 46,000 $1,162,000 $ 17,000 46,000 242,000 9,000 7,600 $321,600 Current Liabilities Note Payable (long-term) (12% interest rate) Common Stock (par $20) Additional Paid-in Capital Retained Earnings Total Liabilities and Stockholders' Equity Income Statement $306,000 170,000 104,000 Sales Revenue $1,090,000 662,000 326,000 $ 102,000 $ 32,000 Cost of Goods Sold Other Expenses Net Income Other Data Per share price at end of year $ 13.60 $ 30.00 Selected Data from Previous Year Accounts Receivable, Net Inventory Equipment, Net Note Payable (long-term) (12% interest rate) Total Stockholders' Equity $ 17,200 35,600 172,000 46,000 258,600 $ 55,800 123,000 750,000 246,000 768,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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