Preparing a Balance Sheet and Ratio Analysis
Given the following data:
|
2001 |
2000 |
|
|
Cash |
$300,000 |
$340,000 |
|
Retained earnings |
? |
? |
|
Accounts payable |
20,000 |
11,000 |
|
Wages payable |
7,000 |
5,000 |
|
Interest payable |
10,000 |
30,000 |
|
Bonds payable |
40,000 |
100,000 |
|
Mortgage payable |
60,000 |
300,000 |
|
Invested capital |
500,000 |
600,000 |
|
Accounts receivable |
37,500 |
118,000 |
|
Inventories |
55,000 |
87,000 |
|
Fixed assets, net |
165,000 |
320,000 |
Required
a. Rearrange these data into classified balance sheets.
b. Find the missing Retained Earnings amounts necessary to balance each balance sheet.
c. Evaluate the firm’s liquidity, using the ratios described in this chapter.
d. Calculate the firm’s asset management and debt management ratios. Evaluate the results.