[jaggyemt]

1. Which of the following gropus of accounts contains only assets
a. equipment, patents, accounts receivable
b. accounts receivable, building, retained earnings
c. accounts payable, notes payable, contributed capital
d. retained earnings, goodwill, accounts payable

The acquistition of equity and debt financing is considered
a. financing activities
b. net income
c. investing activities
d. operating activities

Using this information that follows taken from Perry's Company financial statements for the years ending December 31, 2005 and 2004 to answer the following problems

Balance State information 2005 2004

Assets
Cash $50 $60
Acct Receivable 40 40
Inventory 40 60
Land, Bbuilding, equipment 290 310
Total Asssets 420 470

Liabilities and Stock Equity
Accts payable 85 235
Common Stock 200 200
Retained Earnings 135 35
Total Liab and Stockholders Equ 420 470

Income statement info
Sales Revenue 900
Cost of goods sold 300
Gross profit 600
Operating expense 500
Net income 100

a. Using the two solvency ratios (curent and quick), indicate whether Perry's solvency position impoved or deteriorated during 2005?


b. In the industry in which Perry is a member has an average accts rec turnover of 27 times, determine if in 2005 Perry is more or less efficient at converting sales to cash than the average firm in it industry. Assume all sales were credit sales.

c. If the industry in which Perry is a member has an average current ratio of 1.0, determine if on December 31, 2005, Perry is more or less solvent than the average firm in its industry as measured by it current ratio.

d. If the industy I which Perry is a member has an average return on equity of 22% determin if in 2005 Jackson is more or less profitable than the averag firm in its industry

c. if the industry in which Perry is a member has inventory turnover of 11 times, determind if in 2005 Perry is more or less at converting inventory into sold units than the average firm in its industry. Explain what information this ratio provides you

d. The industry in which Perry is a member has an average debt/equity ratio of .083. Determind if a s measured by the debt/equity ratio on Dec 31, 2005, Perry is taking full advantage of investing borrowed capital in its operations related to that of the average firm in its industry. Explain.

[Curlyben]

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