(A) CONARD CORPORATION

1. The comparative condensed balance sheet of Conard Corporation are presented blow CONARD CORPORATION Comparative Condensed Balance Sheet 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 stockholder’s equity Current liabilities $ 42,000 $48,000 Long-term liabilities 143,000 150,000 Stockholder’s equity 15,000 12,000 Total liabilities and stockholders equity $200,000 $210,000 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 colum-nar form for 2012.

2. Nordstrom, INC operates department stores in numerous states. Selected financal statement data for the year ending January 31, 2012, are shown below. NORDSTROM. INC Balance Sheet (partial) (in millions) End-of –Year Beginning –of –Year Cash and cash equivalents $ 72 $ 358 Accountings receivable ( net) 1,942 1,788 Merchandise inventory 900 956 Prepaid expenses 93 78 Other current assets 210 181 Total current assets 3,127 3,361 Total current liabilities $1,601 1,635 For the year, net credit sales were $8,272, and cost of goods sold was $5,417 (millions). a. Compute the four liquidity ratios at the end of the year. b. Using the data in the chapter , compare Nordstrom’s liquidity with (1) that of J.C Penny company, and (2) the industry average for the department stores. J.C. PENNEY COMPANY Net Sales ( in millions) 2007 2006 2005 $19,860 $19,903 $18,782

3. Bennis Company has the following comparative balance sheet data. BENNIS COMPANY Balance Sheets December 31 2012 2011 Cash $ 15,000 $30,000 Receviables (net) 70,000 60,000 Inventories 60,000 50,000 Plant assets (net) 200,000 180,000 $345,000 $320,000 Accounts payable $50,000 $60,000 Mortgage payable (15%) 100,000 100,000 Common stock, $10 par 140,000 120,000 Retained earnings 55,000 40,000 $345,000 $320,000 Additional Information for 2012 1. Net income was $25,00 2. Sales on account were $410,000 3. Cost of goods sold was $198,000 4. The allowance for doublful accounts was $2,500 on December 31 2012, and $2,000 on December 31, 2011. Compute the following ratios at December 31, 2012. a. Current. b. Acid-test. c. Receivables turnover. d. Inventory turnover.

(a) CONARD CORPORATION

Condensed Balance Sheets

December 31

2012 / 2011 / Increase
(Decrease) / Percentage
Change
from 2011
Assets
Current assets
Property, plant
equipment (net)
Intangibles
Total assets / $74,000
99,000
27,000
$200,000 / $80,000
90,000
40,000
$210,000 / $(6,000)
(9,000)
(13,000)
$(10,000) / (7.5%)
(10.0%)
(32.5%)
(4.8%)

CONARD CORPORATION

Condensed Balance Sheets (Continued)

December 31

2012 / 2011 / Increase
(Decrease) / Percentage
Change
from 2011
Liabilities and stock-
holders’ equity
Current liabilities
Long-term
liabilities
Stockholders’
equity
Total liabilities and
stockholders’
equity / $42,000
143,000
15,000
$200,000 / $48,000
150,000
12,000
$210,000 / $(6,000)
(7,000)
3,000)
$(10,000) / (12.5%)
(4.7%)
(25.0%)
(4.8%)

(b) CONARD CORPORATION

Condensed Balance Sheet

December 31, 2012

Amount / Percent
Assets
Current assets
Property, plant, and equipment (net)
Intangibles
Total assets
Liabilities and stockholders’ equity
Current liabilities
Long-term liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity / $74,000
99,000
27,000
$200,000
$42,000
143,000
15,000
$200,000 / 37.0%
49.5%
13.5%
100.0%
21.0%
71.5%
7.5%
100.0%

(a) Current ratio = 2.01:1 ($3,217 ÷ $1,601)

Acid-test ratio = 1.26:1 ($2,014 ÷ $1,601)

Receivables turnover = 4.4 times ($8,272 ÷ $1,865)*

Inventory turnover = 5.8 times ($5,417 ÷ $928)**

*($1,942 + $1,788) ÷ 2

**(900 + 956) ÷ 2

(b)

Ratio Nordstrom J.C. Penney Industry

Current 2.01 2.02 1.06

Acid-test 1.26 0.87 0.29

Receivables turnover 4.4 57.0 28.2

Inventory turnover 5.8 3.5 7.0

Nordstrom is slightly below J.C. Penney for the current ratio and above

J.C. Penney for the acid-test ratio, but significantly below for the

receivables turnover. Nordstrom is also better than J.C. Penney for

inventory turnover.

Nordstrom is better than the industry average for the current and acid test

ratios but below the industry average for the receivables turnover

and the inventory turnover ratio.

(a) = 2.9:1.

(b) = 1.7:1.

(d) = 3.6 times.

(1) /
(2) /