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Gerrard Construction Co. is an excavation contractor. The following summarized data (in th
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excavation-contractor-the-following-summarized
Gerrard Construction Co is an excavation contractor The following summarized
Gerrard Construction Co. is an excavation contractor. The following summarized data (in
thousands) are taken from the December 31, 2016, financial statements:
Assets
At December 31, 2015, total assets were $164,000 and total stockholders' equity was $65,200.
There were no changes in notes payable or paid-in capital during 2016.
Required:
a. The cost of services provided amount includes all operating expenses (selling, general, and
administrative expenses) except depreciation expense. What do you suppose the primary
reason was for management to separate depreciation from other operating expenses? From a
conceptual point of view, should depreciation be considered a "cost" of providing services?
b. Why do you suppose the amounts of depreciation expense and interest expense are so high
for Gerrard Construction Co.? To which specific balance sheet accounts should a financial
analyst relate these expenses?
d. Explain why the amount of income tax expense is different from the amount of income taxes
payable.
e. Calculate the amount of total current assets. Why do you suppose this amount is so low,
relative to total assets?
g. Calculate the amount of working capital and the current ratio at December 31, 2016. Assess
the company's overall liquidity.
h. Calculate ROI (including margin and turnover) and ROE for the year ended December 31,
2016. Assess the company's overall profitability. What additional information would you like to
have to increase the validity of this assessment?
i. Calculate the amount of dividends declared and paid during the year ended December 31,
2016.
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Gerrard Construction Co is an excavation contractor The following summarized
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excavation-contractor-the-following-summarized
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