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Finance Homework

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P5. Following are selected financial data in thousands of dollars for the Hunter Corporation.

2012

2011

Current Assets

$500

$400

Fixed Assets, Net

$700

$600

Total Assets

$1,200

$1,000

Current Liabilities

$300

$200

Long-Term Debt

$200

$200

Common Equity

$700

$600

Total Liabilities and equity

$1,200

$1,000

Net sales

$1,500

$1,200

Total Expense

($1,390)

($1,100)

Net Income

$110

$100

a. Calculate Hunter’s rate of return on total assets in 2012 and in 2011. Did the ratio improve or worsen?

Return on assets % = Net Income/Total Assets

For 2011, 100,000/1,000,000 = 0.1 or 10%

For 2012, 110,000/1,200,000 = 0.092 or 9.2%

The ratio worsened.

b. Diagram the expanded Du Point system for Hunter for 2012. Insert the appropriate dollar amounts wherever possible.

c. Use the Du Pont system to calculate the return on assets for the two years, and determine why they changed.

P6. Following are financial statements for the Genatron Manufacturing Corporation for 2012 and 2011.

BALANCE SHEET

2012

2011

ASSETS

Cash

$40,000

$50,000

Accts. Receivable

$260,000

$200,000

Inventory

$500,000

$450,000

Total Current assets

$800,000

$700,000

Fixed Assets, Net

$400,000

$300,000

Total Assets

$1,200,000

$1,000,000

LIABILITIES AND EQUITY

Accts. Payable

$170,000

$130,000

Bank Loan

$90,000

$90,000

Accruals

$70,000

$50,000

Total Current Liabilities

$330,000

$270,000

Long-term debt, 12%

$400,000

$300,000

Common Stock, $10 par

$300,000

$300,000

Capital Surplus

$50,000

$50,000

Retained earnings

$120,000

$80,000

Total Liabilities &equity

$1,200,000

$1,000,000

INCOME STATEMENT

2012

2011

Net Sales

$1,500,000

$1,300,000

Cost of Goods Sold

$900,000

$780,000

INCOME STATEMENT

2012

2011

Gross profit

$600,000

$520,000

Expenses: General and Administrative

$150,000

$150,000

Marketing

$150,000

$150,000

Depreciation

$53,000

$40,000

Interest

$57,000

$45,000

Earnings before taxes

$190,000

$155,000

Income Taxes

$76,000

$62,000

Net Income

$114,000

$93,000

a. Apply Du Pont analysis to both the 2012 and 2011 financial statements’ data.

b. Explain how financial performance differed between 2012 and 2011.


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Final Answer

Smartbrains (326)
Rice University

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Anonymous
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