Please Post a 150-300 Word Response to the Following Discussion Question by Clicking on Reply. Solve Problem P15-7 on Page 741 of Your Reading Material. the Name of This Company Is Cotte Corporation. You Are Required to

Only available on StudyMode
  • Download(s) : 181
  • Published : May 23, 2013
Open Document
Text Preview
COTTE CORPORATION| |
Income Statement| |
For the Year Ended December 31, 2009| |
| | |
Sales| $11,000,000| |
Cost of goods sold| $5,184,000| |
Gross profit| $5,816,000| |
Operating expenses| $1,665,000| |
Income from operations| $4,151,000| |
Other expenses and losses Interest Expense| $1,996,000| | Income before income taxes| $2,155,000| |
Income tax expense| $560,000| |
Net income| $1,595,000| |
| | |
| | |
| | |
COTTE CORPORATION|
Balance Sheets|
December 31|
| | |
Assets| 2009| 2008|
Current assets| | |
Cash| $450,000| $375,000|
Accounts Receivable (net)| $1,100,000| $950,000|
Inventory| $1,080,000| $1,720,000|
Total Current Assets| $2,630,000| $3,045,000|
Plant Assets (net)| $4,620,000| $3,955,000|
Total Assets| $7,250,000| $7,000,000|
| | |
Liabilities and Stockholders’ Equity| | |
Current liabilities| $876,667| $825,000|
Long-term notes payable| $2,800,000| $2,800,000|
Total Liabilities| $3,676,667| $3,625,000|
Common stock, $1 par| $3,000,000| $3,000,000|
Retained earnings| $400,000| $375,000|
Total stockholders’ equity| $3,400,000| $3,375,000| Total liabilities and stockholders’ equity| $7,076,667| $7,000,000|

Computation:
Profit margin = Net income / Net sales
0.145 = Net income/$11000000
Net income = $1595000

Current ratio = Current assets/Current liabilities
3 =$2630000/current liabilities
Current liabilities = $876667

Receivables turnover= Net credit sales/Average net receivables 10 = $11000000/Average net receivables
Average net receivables =$ 1100000

Inventory turnover = Cost of goods sold/Average inventory
4.8 =Cost of goods sold/$1080000
Cost of goods sold = $5184000

Return on assets = Net income/Average assets
0.22 =1595000/Average assets
Average assets = $7250000

Yes I would invest in this...
tracking img