Chapter 11
Financial Statement Analysis
582
AP-15B (
3
4
5
)
Below is select financial statement information for Alpha Inc. and Delta Corp.
Alpha Inc.
Delta Corp.
Sales
$105,000
$87,000
Cost of Goods Sold
34,125
29,580
Gross Profit
70,875
57,420
Expenses
Operating Expense
15,750
13,050
Depreciation Expense
10,500
8,700
Advertising Expense
5,250
4,350
Interest Expense
8,925
4,524
Total Expenses
40,425
30,624
Net Income before Taxes
30,450
26,796
Income Tax Expense
18,900
15,660
Net Income
$11,550
$11,136
Cash
$18,525
$24,700
Accounts Receivable
12,300
21,070
Inventory
34,500
30,125
Equipment
66,800
63,460
Total Assets
$132,125
$139,355
Accounts Payable
$43,530
$33,177
Unearned Revenue
17,800
29,580
Current Portion of Long-Term Debt
8,304
1,324
Long-Term Debt
27,680
8,825
Shareholders' Equity
34,811
66,449
Total Liabilities and Shareholders' Equity
$132,125
$139,355
Required
a) Calculate the liquidity and leverage ratios as shown in the table below.
Alpha Inc. Delta Corp.
EBIT
Interest Coverage Ratio
Current Ratio
Quick Ratio
Debt-to-Equity Ratio
