Long-Term Solvency Ratios Summary data from year-end financial statements of Palm Springs Company for the current year follow. Summary Income Statement Data Sales $10, 500, 600 Cost of goods sold 6,050,000 Selling expenses 685,000 Administrative expenses 945,000 Interest expense 783, 500 Income tax expense 427,791 8,891,291 Net income $1,609,309 Summary Balance Sheet Data Cash $84, 700 Total liabilities $749,700 Noncash assets 885,500 Stockholders' equity 220, 500 Total assets $970, 200 Total liabilities and equity $970, 200 Round answers to one decimal place. a. Compute the ratio of times - interest - earned. Answer times b. Compute the debt-to-equity ratio. Answer

Long-Term Solvency Ratios Summary data from year-end financial statements of Palm Springs Company for the current year follow. Summary Income Statement Data Sales $10, 500, 600 Cost of goods sold 6,050,000 Selling expenses 685,000 Administrative expenses 945,000 Interest expense 783, 500 Income tax expense 427,791 8,891,291 Net income $1,609,309 Summary Balance Sheet Data Cash $84, 700 Total liabilities $749,700 Noncash assets 885,500 Stockholders' equity 220, 500 Total assets $970, 200 Total liabilities and equity $970, 200 Round answers to one decimal place. a. Compute the ratio of times - interest - earned. Answer times b. Compute the debt-to-equity ratio. Answer

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 4PB

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Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $897,900 $730,000 774,400 Cost of goods sold 640,000 Gross profit $123,500 $90,000 Selling expenses $35,030 $31,000 Administrative expenses 31,460 26,000 Total operating expenses $66,490 $57,000 $57,010 Income before income tax $33,000 22,800 Income tax expenses 13,200 $34,210 $19,800 Net income a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase (Decrease) (Decrease) Percent Increase year Amount year Amount Amount
Ratios Analyzing Firm ProfitabilityThe following information is available for Buhler Company: Annual Data Current Year Previous Year Net sales $8,800,000 $8,200,000 Gross profit on sales 3,053,000 2,736,000 Net income 567,600 488,000 Dec. 31, Dec. 31, Year-End Data Current Year Previous Year Total assets $6,700,000 $6,300,000 Stockholders' equity 3,800,000 3,200,000 Calculate the following ratios for the current year: Note: Round answers to one decimal place, unless otherwise noted. a. Gross profit percentageAnswer%b. Return on salesAnswer%c. Asset turnover (Round answer to two decimal places.)Answerd. Return on assetsAnswer%e. Return on common stockholders' equity (Buhler Company has no preferred stock.)Answer% PreviousSave AnswersNext
Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $965,200 $760,000 Cost of goods sold 818,400 660,000 Gross profit $146,800 $100,000 Selling expenses $43,290 $37,000 Administrative expenses 38,750 31,000 Total operating expenses $82,040 $68,000 Income before income tax $64,760 $32,000 Income tax expenses 25,900 12,800 Net income $38,860 $19,200 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Sales $965,200 $760,000 % Cost of goods sold 818,400 660,000 % Gross profit $146,800 $100,000 % Selling expenses $43,290 $37,000 % Administrative…
Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $878,400 $720,000 Cost of goods sold 725,900 610,000 Gross profit $152,500 $110,000 Selling expenses $42,560 $38,000 Administrative expenses 38,400 32,000 Total operating expenses $80,960 $70,000 Income before income tax $71,540 $40,000 Income tax expenses 28,600 16,000 Net income $42,940 $24,000 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 CurrentyearAmount PreviousyearAmount Increase(Decrease)Amount Increase(Decrease)Percent Sales $878,400 $720,000 $ % Cost of goods…
Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $418,200 $340,000 Cost of goods sold 350,900 290,000 Gross profit $67,300 $50,000 Selling expenses $19,210 $17,000 Administrative expenses 16,940 14,000 Total operating expenses $36,150 $31,000 Income before income tax $31,150 $19,000 Income tax expenses 12,500 7,600 Net income $18,650 $11,400 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 CurrentyearAmount PreviousyearAmount Increase(Decrease)Amount Increase(Decrease)Percent Sales $418,200 $340,000 $fill in the blank…
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 8 percentage points, while selling expenses - by 4 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points.
Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows:     Current Year     Previous Year Sales $537,600 $420,000 Cost of goods sold 462,500 370,000 Gross profit $75,100 $50,000 Selling expenses $22,420 $19,000 Administrative expenses 20,160 16,000 Total operating expenses $42,580 $35,000 Income before income tax $32,520 $15,000 Income tax expenses 13,000 6,000 Net income $19,520 $9,000 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 CurrentyearAmount PreviousyearAmount Increase(Decrease)Amount Increase(Decrease)Percent Sales $537,600 $420,000 $fill in the blank…
Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:        Current Year        Previous Year Sales $4,000,000 $3,600,000 Cost of goods sold 2,280,000 1,872,000 Selling expenses 600,000 648,000 Administrative expenses 520,000 360,000 Income tax expense 240,000 216,000 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round to the nearest whole percentage. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current yearAmount Current yearPercent Previous yearAmount Previous yearPercent Sales $4,000,000 % $3,600,000 % Cost of goods sold (2,280,000) % (1,872,000) % $ % $ % Selling expenses $(600,000) % $(648,000) % Administrative expenses (520,000) % (360,000) % $ % $ % $ % $ % Income tax expense (240,000) % (216,000) % $ % $ % b.…
Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:        Current Year        Previous Year Sales $4,000,000 $3,600,000 Cost of goods sold 2,280,000 1,872,000 Selling expenses 600,000 648,000 Administrative expenses 520,000 360,000 Income tax expense 240,000 216,000 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales $4,000,000 fill in the blank f86a69fccf96045_1% $3,600,000 fill in the blank f86a69fccf96045_2% Cost of goods sold 2,280,000 fill in the blank f86a69fccf96045_3% 1,872,000 fill in the blank f86a69fccf96045_4% $fill…
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $ 2,580,000 $3,550,000 Cost of goods sold 1,578,960 1,938,300 Selling expenses 304,440 546,700 Administrative expenses 397,320 440,200 Income tax expense 134,160 198,800 A. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round your percentages answers to one decimal place. Enter all amounts as positive numbers. B. Comment on the significant changes disclosed by the comparative income statement.
Horizontal Analysis of the Income Statement Income statement data for Boone Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $810,700 $670,000 Cost of goods sold 678,300 570,000 Gross profit $132,400 $100,000 Selling expenses $36,630 $33,000 Administrative expenses 33,320 28,000 Total operating expenses $69,950 $61,000 Income before income tax $62,450 $39,000 Income tax expenses 25,000 15,600 Net income $37,450 $23,400 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Boone Company Comparative Income Statement For the Years Ended December 31 Current year Amount Previous year Amount Increase (Decrease) Amount Increase (Decrease) Percent Sales $810,700 $670,000 % Cost of goods sold 678,300 570,000 Gross profit $132,400 $100,000 % Selling expenses 36,630 33,000 Administrative expenses 33,320…
Accounts Receivable and Inventory Ratios Bell Company had the following current assets at year-end: Cash $72,500 Short-term investments 123,500 Accounts receivable (net) 425,000 Inventory 500,000 Prepaid expenses 29,000 Current assets $1,150,000 The company had net sales for the year of $2,205,000 and cost of goods sold of $1,347,500.At the beginning of the year, Bell’s accounts receivable (net) were $352,000 and itsInventory was $429,000.a. What is the company’s accounts receivable turnover for the year? (Round to two decimal places.) Answer b. What is the company’s average collection period for the year? (Round to one decimal place.) Answer c. What is the company’s inventory turnover for the year? (Round to two decimal places.) Answer d. What is the company’s days’ sales in inventory for the year? (Round to one decimal place.) Answer