Finance Homework
Other
Only the Questions in Red need to be answered
P5. Following are selected financial data in thousands of dollars for the Hunter Corporation.
|
2012 |
2011 |
|
|
Current Assets |
$500 |
$400 |
|
Fixed Assets, Net |
$700 |
$600 |
|
Total Assets |
$1,200 |
$1,000 |
|
Current Liabilities |
$300 |
$200 |
|
Long-Term Debt |
$200 |
$200 |
|
Common Equity |
$700 |
$600 |
|
Total Liabilities and equity |
$1,200 |
$1,000 |
|
Net sales |
$1,500 |
$1,200 |
|
Total Expense |
($1,390) |
($1,100) |
|
Net Income |
$110 |
$100 |
a. Calculate Hunter’s rate of return on total assets in 2012 and in 2011. Did the ratio improve or worsen?
Return on assets % = Net Income/Total Assets
For 2011, 100,000/1,000,000 = 0.1 or 10%
For 2012, 110,000/1,200,000 = 0.092 or 9.2%
The ratio worsened.
b. Diagram the expanded Du Point system for Hunter for 2012. Insert the appropriate dollar amounts wherever possible.
c. Use the Du Pont system to calculate the return on assets for the two years, and determine why they changed.
P6. Following are financial statements for the Genatron Manufacturing Corporation for 2012 and 2011.
|
BALANCE SHEET |
2012 |
2011 |
|
ASSETS |
||
|
Cash |
$40,000 |
$50,000 |
|
Accts. Receivable |
$260,000 |
$200,000 |
|
Inventory |
$500,000 |
$450,000 |
|
Total Current assets |
$800,000 |
$700,000 |
|
Fixed Assets, Net |
$400,000 |
$300,000 |
|
Total Assets |
$1,200,000 |
$1,000,000 |
|
LIABILITIES AND EQUITY |
||
|
Accts. Payable |
$170,000 |
$130,000 |
|
Bank Loan |
$90,000 |
$90,000 |
|
Accruals |
$70,000 |
$50,000 |
|
Total Current Liabilities |
$330,000 |
$270,000 |
|
Long-term debt, 12% |
$400,000 |
$300,000 |
|
Common Stock, $10 par |
$300,000 |
$300,000 |
|
Capital Surplus |
$50,000 |
$50,000 |
|
Retained earnings |
$120,000 |
$80,000 |
|
Total Liabilities &equity |
$1,200,000 |
$1,000,000 |
|
INCOME STATEMENT |
2012 |
2011 |
|
Net Sales |
$1,500,000 |
$1,300,000 |
|
Cost of Goods Sold |
$900,000 |
$780,000 |
|
INCOME STATEMENT |
2012 |
2011 |
|
Gross profit |
$600,000 |
$520,000 |
|
Expenses: General and Administrative |
$150,000 |
$150,000 |
|
Marketing |
$150,000 |
$150,000 |
|
Depreciation |
$53,000 |
$40,000 |
|
Interest |
$57,000 |
$45,000 |
|
Earnings before taxes |
$190,000 |
$155,000 |
|
Income Taxes |
$76,000 |
$62,000 |
|
Net Income |
$114,000 |
$93,000 |
a. Apply Du Pont analysis to both the 2012 and 2011 financial statements’ data.
b. Explain how financial performance differed between 2012 and 2011.
