Use the Common-Size Statement Analysis Template linked in the resources to complete the following in your Financial and Managerial Accounting textbook:
· Problem 13-2B, page 623.
Review the Common-Size Statement Analysis Scoring Guide to ensure you have met the criteria for this assignment prior to submission. Submit your completed problem in the assignment area.
Problem 13-2B Ratios, common-size statements, and trend percents
Selected comparative financial statement information of Bluegrass Corporation follows.
1. Compute each year’s current ratio. (Round ratio amounts to one decimal.)
2. Express the income statement data in common-size percents. (Round percents to two decimals.)
3. Express the balance sheet data in trend percents with 2015 as the base year. (Round percents to two decimals.) Check (3) 2017, Total assets trend, 133.18%
Analysis Component
4. Comment on any significant relations revealed by the ratios and percents computed.
Use either a Word document or an Excel spreadsheet to complete the following in your Financial and Managerial Accounting textbook:
· Problem 13-5B, page 624.
Calculations for each ratio must be shown.
Problem 13-5B Comparative ratio analysis
Summary information from the financial statements of two companies competing in the same industry follows.
Required
1. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) receivable turnover, (d) inventory turnover, (e) days’ sales in inventory, and (f) days’ sales uncollected. Identify the company you consider to be the better short-term credit risk and explain why. Round to one decimal place. Check (1) Fargo: Accounts receivable turnover, 4.9; Inventory turnover, 3.0
2. For both companies compute the ( a) profit margin ratio, ( b) total asset turnover, ( c) return on total assets, and ( d) return on common stockholders’ equity. Assuming that each company paid cash dividends of $1.50 per share and each company’s stock can be purchased at $25 per share, compute their ( e) price-earnings ratios and ( f) dividend yields. Round to one decimal place; for part b, round to two decimals. Identify which company’s stock you would recommend as the better investment and explain why. (2) Ball: Profit margin, 9.2%; PE, 11.4
