Classified Balance Sheets
Project description
The following (given in scrambled order) are accounts and balances from the accounting records of Alleg, Inc., as of December 31, 2012, after the books were closed for the year.
Common stock, authorized 21,000 share
At $1 par value, issued 12,000 shares $12,000
Additional paid-in capital 38,000
Cash 14,000
Marketable securities 17,000
Accounts receivable 26,000
Accounts Payable 16,000
Current maturities of long-term debt 11,000
Mortgages payable 80,000
Bonds payable 65,000
Inventory 33,000
Land and buildings 57,000
Machinery and equipment 120,000
Goodwill 13,000
Patents 9,000
Other assets 45,000
Deferred income taxes (long-term liability) 18,000
Retained earnings 33,000
Accumulated depreciation 61,000
Bonds and mortgages generally have 10-30 years until maturity. Marketable securities are short-term investments that can be converted to cash in a matter of minutes.
Required:
1.Prepare a classified balance sheet with a proper heading on a spreadsheet. For assets, use the classifications of current assets, plant and equipment, intangibles, and other assets. For liabilities, use the classifications of current liabilities and long-term liabilities.
2.Compute the total asset turnover rate assuming that total revenues in 2012 were $682,500. Round to the nearest hundredth, e.g. 3.33.
3.Assume that Allegs primary competitor has an asset turnover of 2.12. What does this tell you about Allegs asset management?
CHAPTER IO – Statement of Cash Flows 435
CASE Io-9 SPECIALTY RETAILER
With this case, we review the cash flow of several specialty retail stores. The companies
reviewed and the year-end dates are as follows:
1. Abercrombie 8c Fitch Co.
(52-week fiscal year ended January 29, 2011; 52-week fiscal year ended January 30,
2010; 52-week fiscal year ended January 31, 2009)
“Abercrombie 85 Fitch Co is a specialty retailer that operates stores and direct-to-
consumer operations.” 10-K
Source: Abercrombie Sc Fitch 2010 1oK
2. Limited Brands, Inc.
(52-week fiscal year ended January 29, 2011; 52-week fiscal year ended January 30,
2010; 52-week fiscal year ended January 31, 2009)
“We operate in the highly competitive specialty retail business.” 10-K
Source: Limited Brands 2010 1oK
3. Gap, Inc.
(52-week fiscal year ended January 29, 2011; 52-week fiscal year ended January 30,
2010; 52-week fiscal year ended January 31, 2009)
“We are a global specialty retailer offering apparel, accessories, and personal care
products.” 10-K
Source: Gap Inc 2010 10-K
Abercrombie 8C Fitch Limited Brands GAP
Data reviewed 2010 2009 2010 2009 2010 2009
Net cash provided by
operating activities $391,789,000 $395,487,000 $1,284,000,000 $1,174,000,000 $1,744,000,000 $1,928,000,000
Net income $150,283,000 $254,000 $805,000,000 $448,000,000 $1,204,000,000 $1,102,000,000
Operating cash flow/current
maturities of long-term debt
and current notes payable
Operating cash flow/total debt 37.06% 39.79% 25.81% 23.53% 58.43% 62.31%
Operating cash flow per share $4.36 $4.46 $3.86 $3.59 $2.72 $2.76
Operating cash flow/cash
dividends 6.35 times 6.43 times .86 times 6.08 times 6.92 times 8.24 times
No current maturities of long-term debt and current notes payable.
Required
a. Comment on the difference between net cash provided by operating activities and net income.
Speculate on which number is likely to be the better indicator of long-term profitability.
b. Comment on the data reviewed for each item
c. Do any of these firms appear to have a cash flow problem? Comment.
CASE lO-IO EAT AT MY RESTAURANT – CASH FLOW
With this case, we review the cash flow of several restaurant companies. The restaurant com-
panies reviewed and the year-end dates are as follows:
1. Yum Brands, Inc.
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