Class 9 Disscusion Problem
Class9discussionproblem
Q.1
Assume the following data for IT Corporation and SS Corporation
| |IT Corporation |SS Corporation |
|Net income |15000 |50000 |
|Sales |150000 |1000000 |
|Total assets |160000 |400000 |
|Total debt |60000 |240000 |
|Shareholder’s equity |100000 |160000 |
a. Compute return on shareholders’ equity. Which firm has the higher return? a. Compute the following ratios for both firms: Net income/sales Net income/total assets Sales/total assets Debt/total assets
Q.2
The balance sheet for Bryan Corporation is given below. Sales for the year were $3,040,000 with 75 percent of sales sold on credit.
BRYAN CORPORATION
Balance Sheet as at Dec.31, 1999
|Assets |$ |Liabilities & Equity |$ |
|Cash |60,000 |Accounts payable |220,000 |
|Accounts receivable |240,000 |Accrued taxes |30,000 |
|Inventory |350,000 |Bonds payable (long-term) |150,000 |
|Plant & equipment |410,000 |Common stock
Q.1
Assume the following data for IT Corporation and SS Corporation
| |IT Corporation |SS Corporation |
|Net income |15000 |50000 |
|Sales |150000 |1000000 |
|Total assets |160000 |400000 |
|Total debt |60000 |240000 |
|Shareholder’s equity |100000 |160000 |
a. Compute return on shareholders’ equity. Which firm has the higher return? a. Compute the following ratios for both firms: Net income/sales Net income/total assets Sales/total assets Debt/total assets
Q.2
The balance sheet for Bryan Corporation is given below. Sales for the year were $3,040,000 with 75 percent of sales sold on credit.
BRYAN CORPORATION
Balance Sheet as at Dec.31, 1999
|Assets |$ |Liabilities & Equity |$ |
|Cash |60,000 |Accounts payable |220,000 |
|Accounts receivable |240,000 |Accrued taxes |30,000 |
|Inventory |350,000 |Bonds payable (long-term) |150,000 |
|Plant & equipment |410,000 |Common stock