QC Accounting Companys Liquidity Positions Questions

Balance Sheet
Assets
Cash
Accts Receivable
Inventories
Total Current Assets
Gross fixed assets
Less accumulated depreciation
Net fixed assets
Total Assets
2022
95,632
987,000
1,466,480
2,549,112
1,197,160
370,140
827,020
3,376,132
2021
97,282
532,960
1,257,360
1,887,602
902,950
263,160
639,790
2,527,392
2020
57,600
351,200
715,200
1,124,000
491,000
146,200
344,800
1,468,800
Liabilities and Equity
Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term debt
Common stock
Retained Earnings
Total equity
Total liabilities and equity
230,780
558,000
430,000
1,218,780
1,205,000
721,176
231,176
952,352
3,376,132
224,160
289,616
536,808
1,050,584
723,432
560,000
193,376
753,376
2,527,392
145,600
136,000
400,000
681,600
323,432
360,000
103,768
463,768
1,468,800
2021
5,034,000
4,288,000
746,000
419,988
326,012
53,986
272,026
84,569
187,457
14,406
173,051
2020
3,432,000
2,864,000
568,000
358,672
209,328
18,900
190,428
43,828
146,600
58,640
87,960
2021
1.73 $
100,000
7.53
40.0%
11.00 $
2020
Income Statement
2022
6,259,040
5,028,393
1,230,647
705,000
525,647
145,264
380,383
111,211
269,172
94,210
174,962
Sales
Cost of goods sold
Gross Margin
Other operating expenses
EBITDA
Dep & amort
EBIT
Int Exp
EBT
Taxes
Net income
Additional Information
Earnings Per Share
Shares outstanding
Book Value per share
Tax Rate
Stock Price
Equity Multiplier – Industry Average
$
$
$
2022
1.35 $
130,000
7.33 $
35.0%
11.75 $
2.00x
2022
Current
Quick
Days sales outstanding
Inventory turnover
Fixed assets turnover
Total assets turnover
Debt to assets ratio
TIE
Gross profit margin
Net profit margin
ROA
2021
1.8x
0.6x
38.6 days
4.0x
7.9x
2.0x
70.2%
3.2x
14.8%
3.4%
6.8%
0.88
100,000
4.64
40.0%
8.50
2020
1.6x
0.6x
37.4 days
4.8x
10.0x
2.3x
68.4%
4.3x
16.6%
2.6%
6.0%
Ind Avg
2.7x
1.0x
32 days
6.1x
7.0x
2.6x
40.0%
6.2x
7.3%
3.5%
9.1%
ROE
Price/earnings
Market/book
23.0%
6.4x
1.5x
19.0%
9.7x
1.8x
18.2%
14.2x
2.4x
Dupont formula
23.0%
19.0%
18.2%
Unit 2 Individual Assignment
All written assignments are expected to be submitted in a professional standard, suitable
for presentation to senior business management.
Your final submission of the homework assignment must be submitted via Brightspace
by the posted due date and time. The Assignment will be locked at the due date/time.
Please contact me well ahead of the deadline if you have extenuating circumstances.
You must upload an Excel spreadsheet for your assignment, with formulas showing all
calculations. If you wish, you may submit, in addition, a Word document or PDF with
accompanying text.
Please name your file !stname, Firstname Unit 2ŠFor this unit, the assignment focuses on ratio analysis: drawing insights about the
company from its financial statements. Please use the data for Cardinal Company found
in the attached Excel spreadsheet to answer the following questions.
1. Calculate Cardinalà2022 Current and Quick ratios. What do you observe about the
trend of the companyàliquidity positions from 2020 to 2022?
2. Calculate the 2022 Inventory Turnover, Days Sales Outstanding, Fixed Assets
Turnover, and Total Assets Turnover ratios. Compared to past years, is CardinalÊefficiency improving or getting worse? Explain.
3. Calculate the 2022 Debt-to-Assets and Times-Interest-Earned ratios. As a creditor,
how would you feel about lending money to Cardinal Company? Explain.
4. Calculate the 2022 Profitability ratios. Focusing on the Gross Profit Margin and Net
Profit Margin versus the industry average, what accounts for their difference?
5. Calculate the Return on Equity (ROE) for 2022 using the DuPont methodology (you
must show your work). Use the individual components of the DuPont equation to
explain why CardinalàROE differed from the industry average.
6. Calculate the 2022 Price/Earnings and Market/Book ratios. Do these ratios indicate
that investors currently have high or low expectations for the companyàfuture
prospects?

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