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
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 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 Nordstroms 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.
1)
(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

$80,000

$(6,000)

(7.5%)

99,000
27,000
$200,000

90,000
40,000
$210,000

(9,000)
(13,000)
$(10,000)

(10.0%)
(32.5%)
(4.8%)

CONARD CORPORATION
Condensed Balance Sheets (Continued)
December 31

Liabilities and stockholders equity

Current liabilities
Long-term
liabilities
Stockholders
equity
Total liabilities and
stockholders
equity

(b)

Percentage
Change
from 2011

2012

2011

Increase
(Decrease)

$42,000

$48,000

$(6,000)

(12.5%)

143,000

150,000

(7,000)

(4.7%)

15,000

12,000

3,000)

(25.0%)

$200,000

$210,000

$(10,000)

(4.8%)

CONARD CORPORATION
Condensed Balance Sheet
December 31, 2012
Amount

Percent

$74,000
99,000
27,000
$200,000

37.0%
49.5%
13.5%
100.0%

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

$42,000
143,000
15,000
$200,000

2)
(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
Current
Acid-test
Receivables turnover
Inventory turnover

Nordstrom
2.01
1.26
4.4
5.8

J.C. Penney
2.02
0.87
57.0
3.5

Industry
1.06
0.29
28.2
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.
3)
(a)

$145,000
= 2.9:1.
$50,000

(b)

$85,000
= 1.7:1.
$50,000

21.0%
71.5%
7.5%
100.0%

(c)

$390,000
$65,000 (1)

(d)

$198,000
= 3.6 times.
$55,000 (2)
(1)

$70,000 + $60,000
2

(2)

$60,000 + $50,000
2

= 6.0 times.