Executive Summary of Wahlberg Company, accounting homework help

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Question Description

Write a 700- to 1,050-word Executive Summary using your solutions from P13-2.

Analyze the liquidity, solvency and profitability of Wahlberg Company.

Recommend with supporting points, whether the Company should be considered as an acquisition target.

Following your reference page, include an outline that you used to develop your summary

The comparative statements of Wahlberg Company are presented here.


Problem 13-A2

WAHLBERG COMPANY
Income Statements
For the Years Ended December 31

2017

2016

Net sales

$1,890,540

$1,750,500

Cost of goods sold

1,058,540

1,006,000

Gross profit

832,000

744,500

Selling and administrative expenses

500,000

479,000

Income from operations

332,000

265,500

Other expenses and losses
Interest expense

22,000

20,000

Income before income taxes

310,000

245,500

Income tax expense

92,000

73,000

Net income

$ 218,000

$ 172,500

WAHLBERG COMPANY
Balance Sheets
December 31

Assets

2017

2016

Current assets
Cash

$ 60,100

$ 64,200

Debt investments (short-term)

74,000

50,000

Accounts receivable

117,800

102,800

Inventory

126,000

115,500

Total current assets

377,900

332,500

Plant assets (net)

649,000

520,300

Total assets

$1,026,900

$852,800

Liabilities and Stockholders’ Equity

Current liabilities
Accounts payable

$ 160,000

$145,400

Income taxes payable

43,500

42,000

Total current liabilities

203,500

187,400

Bonds payable

220,000

200,000

Total liabilities

423,500

387,400

Stockholders’ equity
Common stock ($5 par)

290,000

300,000

Retained earnings

313,400

165,400

Total stockholders’ equity

603,400

465,400

Total liabilities and stockholders’ equity

$1,026,900

$852,800


All sales were on account. Net cash provided by operating activities for 2017 was $220,000. Capital expenditures were $136,000, and cash dividends were $70,000.



Compute the following ratios for 2017. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)



(a)Earnings per share

$Entry field with incorrect answer3.61

(b)Return on common stockholders’ equity

Entry field with incorrect answer39.83

%
(c)Return on assets

Entry field with incorrect answer22.26

%
(d)Current ratio

Entry field with incorrect answer1.84

:1
(e)Accounts receivable turnover

Entry field with incorrect answer16.73

times
(f)Average collection period

Entry field with incorrect answer21.82

days
(g)Inventory turnover

Entry field with incorrect answer8.71

times
(h)Days in inventory

Entry field with incorrect answer41.91

days
(i)Times interest earned

Entry field with incorrect answer14.24

times
(j)Asset turnover

Entry field with incorrect answer1.98

times
(k)Debt to assets ratio

Entry field with incorrect answer42.17

%
(l)Free cash flow

$Entry field with incorrect answer28218

Tutor Answer

Dani M
School: Carnegie Mellon University

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Date:
THE LIQUIDITY, SOLVENCY AND PROFITABILITY OF WAHLBERG COMPANY
Solvency, liquidity and profitability are important, and successful companies are both solvent,
own a lot of liquidity and are very profitable. A sum of financial ratios are used to gauge a
company’s liquidity, solvency and profitability. The vast common of which are argued in this
paper.

The owners of the Wahlberg Company supply the equity invested in the company. The equity is
measured as the ratio of profit generated to the total investment capital provided by the owners of
the company. Therefore the return on equity measures the profitability with which the company’s
money was managed. Since the executive board is straightforwardly responsible to the firm, they
capitalize on profit equity within bearable limits of risk which is crucial and proper apprehension
of executive management is required. At the top level of the executive management and outside
the company, return on equity is the most usual expression of ROI idea apple to the company
performance (Almarzoqi, Ben, Scopelliti, & International Monetary Fund, 2015,).

In the coefficient table it is observed that the liquidity ratio has a positive impact in performance
in both standardized and un- standardized and significant. In the solvency ratio overall values
shows the negative impact on performance in both standardized and in standardized and
significant. Liquidity in the company shows a positive result. Th...

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