Home / Questions / all details needed Financial statement analysis The financial statements of Zach Industries for the
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Financial statement analysis The financial statements of Zach Industries for the year ended December 31, 2015, follow. P3-24 LG6 Zach Industries Income Statement for the Year Ended December 31, 2015 Sales revenue $160,000 Less: Cost of goods sold Gross profits Less: Operating expenses 106,000 $ 54,000 Selling expense General and administrative expenses $ 16,000 10,000 Lease expense 1,000 Depreciation expense Total operating expense 10,000 37,000 $ 17,000 Operating profits Less: Interest expense 6,100 10,90 Net profits before taxes Less: Taxes 4,360 Net profits after taxes S 6,540 PART 2 Financial Tools Zach Industries Balance Sheet December 31, 2015 Assets 500 Cash 1,000 Marketable securities 25,000 Accounts receivable 45,500 $ 72,000 Inventories Total current assets 26,000 Land 90,000 Buildings and equipment Less: Accumulated depreciation 38,000 $78,000 $150,000 Net fixed assets Total assets Liabilities and Stockholders' Equity 22,000 $ Accounts payable Notes payable Total current liabilities 47,000 69,000 $ 22,950 Long-term debt 31,500 Common stock 26,550 Retained earnings S 150,000 Total liabilities and stockholders' equity The firm's 3,000 outstanding shares of common stock closed 2015 at a price of $25 per share. complete the following table. Assume that a. Use the preceding financial statements to the industry averages given in the table are applicable for both 2014 and 2015. Industry average Actual 2014 Actual 2015 Ratio 1.80 1.84 Current ratio Quick ratio 0.70 0.78 Inventory turnover" 2.50 2.59 Average collection period 36.5 days 37.5 days Debt ratio 65% 67% Times interest earned ratio 3.8 4.0 Gross profit margin Net profit margin Return on total assets 38% 40% 3.5% 3.6% 4.0% 4.0% Return on common equity 9.5% 8.0% Market/book ratio 1.1 1.2 "Based on a 365-day year and on end-of-year figures. b. Analyze Zach Industries' financial condition as it is related to (1) liquidity, (2) activity, (3) debt, (4) profitability, and (5) market. Summarize the company overall financial condition.
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