Comparative Condensed Balance Sheets
E14-3
The comparative condensed balance sheets of Conard Corporation are presented below.
CONARD CORPORATION
Comparative Condensed Balance Sheets
December 31
2012 2011
Assets
Current assets $ 74,000 $ 80,000
Property, plant, and equipment (net) 99,000 90,000
Intangibles 27,000 40,000
Total assets $200,000 $210,000
Liabilities and stockholders’ equity
Current liabilities $ 42,000 $ 48,000
Long-term liabilities 143,000 150,000
Stockholders’ equity 15,000 12,000
Total liabilities and stockholders’ equity $200,000 $210,000
Instructions
(a) Prepare a horizontal analysis of the balance sheet data for Conard Corporation using 2011 as a base.
(b) Prepare a vertical analysis of the balance sheet data for Conard Corporation in columnar form for 2012.
E13-8 Here are comparative balance sheets for Taguchi Company.
TAGUCHI COMPANY
Comparative Balance Sheets
December 31
Assets 2011 2010
Cash $ 73,000 $ 22,000
Accounts receivable 85,000 76,000
Inventories 170,000 189,000
Land 75,000 100,000
Equipment 260,000 200,000
Accumulated depreciation (66,000) (32,000)
Total $597,000 $555,000
Liabilities and Stockholders’ Equity
Accounts payable $ 39,000 $ 47,000
Bonds payable 150,000 200,000
Common stock ($1 par) 216,000 174,000
Retained earnings 192,000 134,000
Total $597,000 $555,000
Additional information:
1. Net income for 2011 was $103,000.
2. Cash dividends of $45,000 were declared and paid.
3. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
4. Common stock was issued for $42,000 cash.
5. No equipment was sold during 2011, but land was sold at cost.
Instructions
Prepare a statement of cash flows for 2011 using the indirect method.
Access the information contained in Riordan Manufacturing’s balance sheet and income statement to calculate the following:
•Liquidity ratios
oCurrent ratio
oAcid-test, or quick, ratio
oReceivables turnover
oInventory turnover
•Profitability ratios
oAsset turnover
oProfit margin
oReturn on assets
oReturn on common stockholders’ equity
•Solvency ratios
oDebt to total assets
oTimes interest earned
Show your calculations for each ratio.
Create a horizontal and vertical analysis for the balance sheet and the income statement.
Write a 350- to 700-word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:
•What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?
•Which users may be interested in each type of ratio?
•What does the collected data reveal about the performance and position of the company?
Riordan Manufacturing, Inc.
Consolidated Balance Sheet
Fiscal Year Ending
September 30th
2011 2010
Assets
Current Assets
Cash $3,725,406 $2,807,029
Accounts Receivable 3,192,094 2,695,342
Current Portion of Notes Receivable 84,255102,976
Inventories 9,709,611 8,517,203
Prepaid Expenses and Other Items 666,591402,240
Total Current Assets $17,377,957 $14,524,790
Notes Receivable, less current portion $842,551 $936,168
Investment in Joint Venture 1,734,004 1,609,004
Property, Plant and Equipment - net 26,366,949 16,658,218
Intangible Assets - net 904,473904,473
Other Assets 183,203192,845
Total Assets $47,409,137 $34,825,498
Liabilities and Stockholders' Equity
Current Liabilities
Current Portion of Long-Term Debt $1,560,959$474,032
Accounts Payable 1,141,561 1,391,385
Accrued Liabilities 430,477 524,685
Income Taxes Payable 552,155 359,955
Total Current Liabilities $3,685,152 $2,750,057
Bank Line of Credit $114,759$295,865
Long-Term Debt - less current portion 9,500,741 1,006,955
Deferred Income Taxes - net 660,503 825,629
Total Liabilities $13,961,155 $4,878,506
Common Stock
Stated par value is $.01.
20,000,000 shares authorized.
Issued and Outstanding 15,801,332 net of treasury shares.$29,055,488$29,055,488
Retained Earnings / (Accumulated Deficit) 4,392,494 891,504
Total Stockholders' Equity $33,447,982$29,946,992
Total Liabilities and Stockholders' Equity $47,409,137$34,825,498
Riordan Manufacturing, Inc.
Income Statement
For the 12 months ending September 30th
2011 2010
Sales $66,608,660$56,534,254
Direct Cost of Goods Sold 51,592,470 43,970,250
Gross Margin $15,016,190$12,564,004
Operating Expenses
Sales, Marketing & Other $1,328,615$ 1,265,348
Depreciation 1,378,616 1,152,125
Quality Assurance 1,151,176 1,112,247
Research & Development 1,039,637 962,627
General & Administrative 4,954,751 4,674,293
Machining & Systems 143,808 125,050
Total Operating Expenses $9,996,603 $9,291,690
Profit Before Interest & Taxes $5,019,587 $3,272,314
Non-Operating Expenses
Interest Expense $ 604,616 $ 121,533
Taxes 1,104,309 719,909
Total Non-Operating Expenses $1,708,925 $ 841,442
Net Profit After Taxes $3,310,662 $2,430,872
USA 
India