Use the following current year financial statements for Abbee Aviation to perform ratio analysis.;Abbee Aviation Income Statement...
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Use the following current year financial statements for Abbee Aviation to perform ratio analysis.
Abbee Aviation Income Statement
Cost of goods sold 2,300,000
Gross profit 2,100,000
Operating expenses 750,000
Operating income (EBIT) 1,350,000
Interest expense 270,000
Earnings before taxes 1,080,000
Taxes (at 40%) 432,000
Net income 648,000
Abbee Aviation Balance Sheet
Accounts receivable 670,000
Total current assets 4,200,000
Fixed assets 5,200,000
Accumulated depreciation (2,400,000)
Net fixed assets 2,800,000
Total assets $7,000,000
Accounts payable 890,000
Accrued liabilities 560,000
Total current liabilities 1,450,000
Bonds payable 3,000,000
Total liabilities 4,450,000
Common stock 550,000
Retained earnings 2,000,000
Total shareholders' equity 2,550,000
Total liabilities and shareholders' equity $7,000,000
(a) Calculate the firm’s operating return on assets. Assume that the firm’s year-end total assets balance for the prior year was $6 million.
(b) Calculate the firm’s net working capital
(c) What is the number of “accounts receivable days” for Abbee Aviation? Assume that the firm’s year-end accounts receivable balance for the prior year was $650,000.
(d) What is the firm’s return on assets at the end of this year? Assume that the firm’s year-end total assets balance for the prior year was $6 million. (Points: 40)
Solution ID:436824 | This paper was updated on 26-Nov-2015Price : $25