I need help with the final exam. Please work out all problems on the exam and please provide original work for the questions.

FINAL EXAM: ACC/400

1. Portugal

 

 

 

The condensed financial statements of Leeward Corporation for 2006 and 2005 are presented below.

 

Leeward Corporation                                                  Leeward Corporation

Balance Sheet                                                         Income Statement

December 31, 2006                                    For the Year Ended December 31, 2006

 

Assets                                                 Revenues                                       $2,500,000

Current assets                                                         Expenses

Cash and temporary                                              Cost of goods sold                       1,080,000

investments                            $   50,000              Selling and administrative

Accounts receivable                      70,000                expenses                                      495,000

Inventories                                    120,000              Interest expense                               30,000

Total current assets               240,000                  Total expenses                        1,605,000

Property, plant, and                                                  Income before income taxes               895,000

equipment (net)                            780,000         Income tax expense                            268,500

Total assets                      $1,020,000         Net income                                     $   626,500

 

 

Liabilities and Stockholders’ Equity

Current liabilities                          $    100,000

Long-term liabilities                            300,000

Common stockholders’ equity           620,000

Total liabilities and

stockholders’ equity                $1,020,000

 

 

 

 

 

 

Leeward Corporation                                                      Leeward Corporation

Balance Sheet                                                         Income Statement

December 31, 2005                                    For the Year Ended December 31, 2005

 

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                              66,000

Total assets                      $1,080,000         Net income                                     $   154,000

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Instructions

 

1. Compute the following listed ratios for 2006.

 

(a)   Current ratio = ___________________________________________________________ .

 

(b)   Debt to total assets = _____________________________________________________ .

 

(c)   Profit margin ratio = ______________________________________________________ .

 

(d)   Return on common stockholders’ equity = ____________________________________ .

 

(e)   Return on assets = _______________________________________________________ .

 

 

 

 

1. Perform horizontal analysis on both the balance sheet and income statement.

 

Leeward Corporation

Balance Sheet

Horizontal Analysis

 

	2006	2005	Change	Percent
Assets
Cash and temporary investments	$50,000	$40,000
Accounts receivable	$70,000	$90,000
Inventories	$120,000	$150,000
Total current assets	$240,000	$280,000
Property, plant and equipment	$780,000	$800,000
Total assets	$1,020,000	$1,080,000
Liabilities & Stockholder’s Equity
Current liabilities	$100,000	$140,000
Long-term liabilities	$300,000	$320,000
Common stockholder’s equity	$620,000	$620,000
Total liabilities and   stockholder’s equity	$1,020,000	$1,080,000

 

 

 

 

 

 

 

 

 

 

 

 

Leeward Corporation

Income Statement

Horizontal Analysis

 

	2006	2005	Change	Percent
Revenues	$2,500,000	$2,500,000
Expenses
Cost of goods sold	$1,080,000	$1,750,000
Selling & administrative expense	$495,000	$500,000
Interest expense	$30,000	$30,000
Total Expenses	$1,605,000	$2,280,000
Income before income taxes	$895,000	$220,000
Income tax expense	$268,500	$66,000
Net Income	$626,500	$154,000

 

 

 

 

1. Perform vertical analysis on both the balance sheet and income statement for 2005 and 2006.

 

Leeward Corporation

Balance Sheet

Vertical Analysis

 

	2006		2005
	Amount	Percent	Amount	Percent
Assets
Cash and temporary investments	$50,000		$40,000
Accounts receivable	$70,000		$90,000
Inventories	$120,000		$150,000
Total current assets	$240,000		$280,000
Property, plant and equipment	$780,000		$800,000
Total assets	$1,020,000		$1,080,000
Liabilities & Stockholder’s Equity
Current liabilities	$100,000		$140,000
Long-term liabilities	$300,000		$320,000
Common stockholder’s equity	$620,000		$620,000
Total liabilities and   stockholder’s equity	$1,020,000		$1,080,000

 

 

 

 

 

 

Leeward Corporation

Income Statement

Vertical Analysis

 

	2006		2005
	Amount	Percent	Amount	Percent
Revenues	$2,500,000		$2,500,000
Expenses
Cost of goods sold	$1,080,000		$1,750,000
Selling & administrative expense	$495,000		$500,000
Interest expense	$30,000		$30,000
Total Expenses	$1,605,000		$2,280,000
Income before income taxes	$895,000		$220,000
Income tax expense	$268,500		$66,000
Net Income	$626,500		$154,000

 

 

 

 

1. Assess the financial performance of Leeward, using your analysis in #2 and #3 above. How have things changed from 2005 to 2006?

 

 

 

 

 

 

 

 

 

 

 

 

 

1. If the company wanted to perform industry comparison analysis, what references would you recommend it use?