The Following Financial Statements Are Available for Jerry Company $\quad$

question 78

Essay

The following financial statements are available for Jerry Company:

$\quad$ $\quad$ $\quad$ $\quad$$\text { Comparative Income Statements }$
$\text { For the Years Ending December } 31,2 \times 13 \text { and } 2 \times 12$

$\quad$$\begin{array}{lrr}&\underline{2 X 13}& \underline{2 X} 12 \\\text { Sales (all credit) } & \$ 750 & \$ 690 \\\text { Cost of Goods Sold } &\underline{ 440 }& \underline{400}\\\text { Gross Profit } & \$ 310 & \$ 290 \\\text { Less: Operating Expenses } & \underline{220} & \underline{205}\\\text { Operating Income } & \$ 90 & \$ 85 \\\text { Less: Income Tax Expense } & \underline{40} & \underline{37} \\\text { Net Income } & \underline{\$ 50}& \underline{\underline{48}}\end{array}$

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$$\quad$$\text { Comparative Balance Sheets }$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { December } 31,2 \times 13 \text { and } 2 \times 12$

$\begin{array}{l}\begin{array}{lll}&\underline{2 X 13}& \underline{2 X} 12 \\ \underline{\text { Current Assets: }} \\ \text { Cash } & \$ 20 & \$ 15 \\\text { Accounts Receivable } & 45 & 37 \\\text { Inventory } & \underline{60} & \underline{70} \\\text { Total Current Assets } & \$ 125 & \$ 122\\ \underline{\text { Long-Term Assets: }} \\\text { Equipment } & \$ 290 & \$ 200 \\\text { Less: Accum. Depr. } & \underline{(160)} & \underline{(140)} \\\text { Total Long-Term Assets } & \underline{\$ 130} & \underline{\$ 60}\\\\\\\text { Total Assets} & \underline{\$ 255} & \underline{\$ 180}\\\end{array}\begin{array}{lll}&\underline{2 X 13}& \underline{2 X} 12 \\\underline{ \text { Current Liabilities: }}\\\text { Accounts Payable } & \$ 24 & \$ 20 \\\text { Taxes Payable } & 11 & 15 \\\text { Note Pavable } & \underline{ 7} & \underline{18}\\\text { Total Current Liab. } & \$ \overline{42} & \$ \overline{53} \\\text { Long-Term Liabilities } & \underline{80} & \underline{30} \\\text { Total Liabilities } & \underline{\$ 122} & \underline{ \$ 83}\\\underline{ \text { Stockholders' Equity: }}\\\text { Common Stock } & \$ 40 & \$ 40 \\\text { Retained Earnings } & \underline{93} & \underline{59} \\\text { ockholders' Equity } &\underline{ \$ 133} &\underline{ \$ 99}\\\text { Total Liab. \& } \\\text { Stockholders' Equity } &\underline{ \$ 255} &\underline{ \$ 182}\\\end{array}\end{array}$
Use the above information to determine the following ratios for 2X13:
a.Quick ratio
b.Average collection period in days
c.Total-debt-to-total-equity
d.Pretax return on assets (ROA)
e.Return on common stockholder's equity (ROE)

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