Question

Prepare a Comparative Financial Statement of ABC Company using the following data: Compute the Following Ratios using the given data

2020 2019 2020 2019

Cash 110,000.00 90,000.00 Current Ratio ? ?

Accounts Receivable 30,000.00 20,000.00 Quick Ratio ? ?

Inventories 40,000.00 35,000.00 NOWC ? ?

Short Term Investments 20,000.00 15,000.00 D/E Ratio ? ?

Fixed Asset 50,000.00 40,000.00 D/A Ratio ? ?

Accounts Payable 75,000.00 60,000.00 Interest Coverage Ratio ? ?

Accruals 25,000.00 10,000.00 Operating Margin ? ?

Notes Payable 50,000.00 40,000.00 Profit Margin ? ?

Common Stock 80,000.00 75,000.00 ROA ? ?

Retained Earnings 20,000.00 15,000.00 BEP ? ?

Sales 120,000.00 100,000.00 ROE ? ?

Cost of Good Sold 60,000.00 50,000.00 A/R Turnover ? ?

Depreciation Expense 3,600.00 2,500.00 Inventory Turnover ? ?

Rent Expense 5,500.00 5,000.00 Fixed Asset Turnover ? ?

Salaries 5,400.00 3,000.00 Total Asset Turnover ? ?

Utilities Expense 2,500.00 1,500.00 P/E Ratio ? ?

Interest Expense 2,000.00 3,000.00 M/B Ratio ? ?

Taxes 6,000.00 5,000.00 *Outstanding Shares for all companies are 10,000

Answer 1

Explanation:

o prepare a Comparative Financial Statement, we need data from at least two periods. As the given data is only for the years 2019 and 2020, we can prepare a comparative financial statement for these two years.

Comparative Financial Statement

ABC Company

For the Years Ended December 31, 2020 and 2019

2020 2019

ASSETS

Cash 110,000 90,000

Accounts Receivable 30,000 20,000

Inventories 40,000 35,000

Short Term Investments 20,000 15,000

Fixed Asset 50,000 40,000

Total Assets 250,000 200,000

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts Payable 75,000 60,000

Accruals 25,000 10,000

Notes Payable 50,000 40,000

Total Liabilities 150,000 110,000

Common Stock 80,000 75,000

Retained Earnings 20,000 15,000

Total Stockholders' Equity 100,000 90,000

Total Liabilities and Stockholders' Equity 250,000 200,000

Ratios

Current Ratio = Current Assets / Current Liabilities

Current Ratio 2020 = (110,000 + 30,000 + 40,000 + 20,000) / (75,000 + 25,000 + 50,000) = 1.32

Current Ratio 2019 = (90,000 + 20,000 + 35,000 + 15,000) / (60,000 + 10,000 + 40,000) = 1.69

Quick Ratio = (Current Assets - Inventories) / Current Liabilities

Quick Ratio 2020 = (110,000 + 30,000 + 20,000) / (75,000 + 25,000 + 50,000) = 0.88

Quick Ratio 2019 = (90,000 + 20,000 + 15,000) / (60,000 + 10,000 + 40,000) = 0.83

NOWC = (Current Assets - Current Liabilities) - (Short Term Investments + Inventories)

NOWC 2020 = ((110,000 + 30,000 + 40,000 + 20,000) - (75,000 + 25,000 + 50,000)) - (20,000 + 40,000) = 10,000

NOWC 2019 = ((90,000 + 20,000 + 35,000 + 15,000) - (60,000 + 10,000 + 40,000)) - (15,000 + 35,000) = 10,000