Chapter 15: Q12RQ (page 835)
Briefly describe the ratios that can be used to evaluate a company’s stock as an investment.
The ratios that can be used for the evaluation of stock as an investment are earnings per share and price-earnings ratio.
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Net sales revenue, net income, and commonA stockholders’ equity for Azbel Mission Corporation, a manufacturer of contact lenses, follow for a four-year period.
Requirements
1.Compute trend analyses for each item for 2017–2019. Use 2016 as the base year,and round to the nearest whole percent.
2.Compute the rate of return on common stockholders’ equity for 2017–2019, rounding to three decimal places.
Grand Oaks Realty’s net revenue & net income for the following five-year period using 2015 as the base year, follow:
Requirement:
Compute a trend analysis for the net revenue & net income. Round to the nearest full percent.
Which grew faster during the period, net revenue or the net income?
Great Value Optical Company reported the following amounts on its balance sheet at
December 31, 2018 and 2017:
2018 2017
Cash and Receivables \( 80,640 \) 80,575
Merchandise Inventory 56,840 54,450
Property, Plant, and Equipment, Net 142,520 139,975
Total Assets \( 280,000 \) 275,000
Prepare a vertical analysis of Great Value’s assets for 2018 and 2017.
Preparing common-size income statements
Refer to the data presented for Mulberry Designs, Inc. in Exercise E15-13.
Requirements
1. Prepare a comparative common-size income statement for Mulberry Designs,
Inc. using the 2018 and 2017 data. Round percentages to one-tenth percent (three
decimal places).
2. To an investor, how does 2018 compare with 2017? Explain your reasoning.
The following data are adapted from the financial statements of Bridget’s Shops, Inc.:
Total Current Assets $ 1,216,000
Accumulated Depreciation 2,000,000
Total Liabilities 1,540,000
Preferred Stock 0
Debt Ratio 55%
Current Ratio 1.60
Prepare Bridget’s condensed balance sheet as of December 31, 2018.
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