The condensed financial statements of Westward Corporation for 2009 and 2008 are presented below.
Westward Corporation Westward Corporation
Balance Sheet Income Statement
December 31, 2009 For the Year Ended December 31, 2009
Assets Revenues $2,000,000
Current assets Expenses
Cash and temporary Cost of goods sold 1,080,000
investments $ 30,000
Selling and administrative
Accounts receivable 70,000
Expenses 495,000
Inventories 120,000
Interest expense 30,000
Total current assets 220,000
Total expenses 1,605,000
Property, plant, and Income
before income taxes 395,000
equipment (net) 780,000
Income tax expense 140,000
Total assets $1,000,000
Net income $ 255,000
Liabilities and Stockholders’ Equity
Current liabilities $ 80,000
Long-term liabilities 300,000
Common stockholders’ equity 620,000
Total liabilities and stockholders’ equity $1,000,000
Westward Corporation Westward Corporation
Balance Sheet Income Statement
December 31, 2008 For the Year Ended December 31, 2008
Assets Revenues $2,500,000
Current assets Expenses
Cash and temporary Cost of goods sold 1,750,000
investments $ 40,000
Selling and administrative
Accounts receivable 90,000
Expenses 500,000
Inventories 150,000
Interest expense 30,000
Total current assets 280,000
Total expenses 2,280,000
Property, plant, and Income before income taxes 220,000
equipment (net) 800,000
Income tax expense 77,000
Total assets $1,080,000
Net income $ 143,000
Liabilities and Stockholders’ Equity
Current liabilities $ 140,000
Long-term liabilities 320,000
Common stockholders’ equity 620,000
Total liabilities and
stockholders’ equity $1,080,000
Select data from fiscal year 2007:
Inventory: $100,000
Total assets: $900,000
Stockholders’ Equity: $540,000
Instructions
1. Compute the following listed ratios for 2009 and 2008 showing supporting calculations. (5.2 points)
a. Current ratio
b. Debt to total Assets
c. Times interest earned
d. Inventory turnover
e. Profit margin ratio
f. Return on common stockholders’ equity
g. Return on assets
2. Perform horizontal and vertical analysis on Westward’s financial statements, show your results. (3.0 points)
3. Assess the financial performance of Westward, given the analysis tools used in questions 1 and 2 above. (5.3 points)
4. If the company wanted to perform industry comparison analysis, what references would you recommend it use? (1.5 points)
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