Brief Exercise 18-4Using the following data from the comparative balance sheet of Goody Company.December 31, 2015 December 31, 2014Accounts receivable $405,324 $435,168Inventory $778,122 $616,488Total assets $2,50
Brief Exercise 18-4
Using the following data from the comparative balance sheet of Goody Company.
December 31, 2015 December 31, 2014
Accounts receivable $405,324 $435,168
Inventory $778,122 $616,488
Total assets $2,502,000 $3,022,000
Illustrate vertical analysis. (Round percentages to 1 decimal place, e.g. 12.1%.)
December 31, 2015 December 31, 2014
Goody Company
Balance Sheets
Amount
Percentage
Amount
Percentage
Accounts receivable $405,324
% $435,168
%
Inventory $778,122
% $616,488
%
Total assets $2,502,000
% $3,022,000
%
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Brief Exercise 18-5
Net income was $499,160 in 2013, $452,610 in 2014, and $526,000 in 2015. What is the percentage of change from (a) 2013 to 2014 and (b) 2014 to 2015? Is the change an increase or a decrease? (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percentages to 0 decimal places, e.g. 12%.)
Increase or (Decrease)
Amount Percentage
(a) 2013–2014
%
(b) 2014–2015
%
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Brief Exercise 18-7
Horizontal analysis (trend analysis) percentages for Dody Company’s sales revenue, cost of goods sold, and expenses are shown below.
Horizontal Analysis 2015 2014 2013
Sales 94.9 106.7 100.0
Cost of goods sold 102.6 97.8 100.0
Expenses 107.5 97.4 100.0
Did Dody’s net income increase, decrease, or remain unchanged over the 3-year period?
2014
2015
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Brief Exercise 18-9
Selected condensed data taken from a recent balance sheet of Heidebrecht Inc. are as follows.
HEIDEBRECHT INC.
Balance Sheet (partial)
Cash $7,930,000
Short-term investments 4,930,900
Accounts receivable 12,188,000
Inventory 14,419,000
Other current assets 5,418,900
Total current assets $44,886,800
Total current liabilities $39,606,000
What are the (a) working capital, (b) current ratio, and (c) acid-test ratio? (Round ratios to 2 decimal places, e.g. 1.58 : 1.)
(a) Working capital $
(b) Current ratio
:1
(c) Acid-test ratio
:1
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Brief Exercise 18-10
Linebarger Corporation has net income of $10.46 million and net revenue of $83.65 million in 2014. Its assets are $12.16 million at the beginning of the year and $18.55 million at the end of the year.
What are Linebarger’s asset turnover and profit margin? (Round answers to 1 decimal place, e.g. 1.6 or 1.6%.)
Asset turnover
times
Profit margin
%
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Exercise 18-3
The comparative condensed balance sheets of Gurley Corporation are presented below.
GURLEY CORPORATION
Comparative Condensed Balance Sheets
December 31
2015 2014
Assets
Current assets $ 73,640 $ 79,650
Property, plant, and equipment (net) 98,500 89,720
Intangibles 26,210 39,910
Total assets $198,350 $209,280
Liabilities and stockholders’ equity
Current liabilities $ 43,910 $ 47,580
Long-term liabilities 142,160 148,540
Stockholders’ equity 12,280 13,160
Total liabilities and stockholders’ equity $198,350 $209,280
Prepare a horizontal analysis of the balance sheet data for Gurley Corporation using 2014 as a base. (Enter negative amounts and percentages using either a negative sign preceding the number e.g. -45, -45% or parentheses e.g. (45), (45%). Round percentages to 1 decimal place, e.g. 12.3%.)
GURLEY CORPORATION
Condensed Balance Sheets
December 31
2015 2014 Increase
(Decrease) Percentage
Change from 2014
Assets
Current Assets $73,640 $79,650 $
%
Property, Plant & Equipment (net) 98,500 89,720
%
Intangibles 26,210 39,910
%
Total assets $198,350 $209,280 $
%
Liabilities and Stockholders' Equity
Current Liabilities $43,910 $47,580 $
%
Long-term Liabilities 142,160 148,540
%
Stockholders' Equity 12,280 13,160
%
Total liabilities and stockholders' equity $198,350 $209,280 $
%
LINK TO TEXT
Prepare a vertical analysis of the balance sheet data for Gurley Corporation in columnar form for 2015. (Round percentages to 1 decimal place, e.g. 12.3%.)
GURLEY CORPORATION
Condensed Balance Sheet
December 31, 2015
Amount Percent
Assets
Current Assets $73,640 %
Property, Plant, and Equipment 98,500 %
Intangibles 26,210 %
Total assets $198,350 %
Liabilities and Stockholders' Equity
Current Liabilities $43,910 %
Long-term Liabilities 142,160 %
Stockholders' Equity 12,280 %
Total liabilities and stockholders' equity $198,350 %
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Exercise 18-4
The comparative condensed income statements of Emley Corporation are shown below.
EMLEY CORPORATION
Comparative Condensed Income Statements
For the Years Ended December 31
2015 2014
Net sales $603,120 $500,740
Cost of goods sold 483,720 416,900
Gross profit 119,400 83,840
Operating expenses 55,680 46,800
Net income $ 63,720 $ 37,040
Prepare a horizontal analysis of the income statement data for Emley Corporation using 2014 as a base. (Round percentages to 1 decimal place, e.g. 12.3%.)
EMLEY CORPORATION
Condensed Income Statements
For the Years Ended December 31
Increase or (Decrease)
During 2015
2015 2014 Amount Percentage
Net sales $603,120 $500,740 $
%
Cost of goods sold 483,720 416,900
%
Gross profit 119,400 83,840
%
Operating expenses 55,680 46,800
%
Net income $63,720 $37,040 $
%
Brief Exercise 18-2
Schellhammer Corporation reported the following amounts in 2013, 2014, and 2015.
2013 2014 2015
Current assets $200,000 $210,000 $240,000
Current liabilities $150,000 $168,000 $184,000
Total assets $500,000 $600,000 $620,000
(b)
Perform each of the three types of analysis on Schellhammer’s current assets. (Round percentages to 0 decimal places, e.g. 43% and ratios to 2 decimal places, e.g.1.58.)
2013 2014 2015
Horizontal Analysis
Current assets
%
%
%
Vertical Analysis
Current assets
%
%
%
Ratio Analysis
Current ratio
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Brief Exercise 18-3
Using the following data from the comparative balance sheet of Goody Company.
December 31, 2015 December 31, 2014
Accounts receivable $520,000 $400,000
Inventory $840,000 $600,000
Total assets $3,000,000 $2,500,000
Illustrate horizontal analysis. (Round percentages to 0 decimal places, e.g. 12%.)
Increase or (Decrease)
Goody Company
Balance Sheet December 31, 2015 December 31, 2014 Amount Percentage
Accounts receivable $520,000 $400,000 $
%
Inventory $840,000 $600,000 $
%
Total assets $3,000,000 $2,500,000 $
%
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Brief Exercise 18-8
Vertical analysis (common size) percentages for Kochheim Company’s sales, cost of goods sold, and expenses are shown below.
Vertical Analysis 2015 2014 2013
Sales 100.0 100.0 100.0
Cost of goods sold 60.2 62.4 63.5
Expenses 25.0 25.6 27.5
(a) Calculate net income.
2015 2014 2013
Net income
(b) Did Kochheim’s net income as a percent of sales increase, decrease, or remain unchanged over the 3-year period?
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Brief Exercise 18-11 (Part Level Submission)
The following data are taken from the financial statements of Rainsberger Company.
2015 2014
Accounts receivable (net), end of year $550,000 $520,000
Net sales on account 3,960,000 3,100,000
Terms for all sales are 1/10, n/60.
(a1)
Compute for each year the accounts receivable turnover. At the end of 2013, accounts receivable (net) was $480,000. (Round answers to 1 decimal place, e.g. 1.6.)
2015 2014
Accounts receivable turnover times
times
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Brief Exercise 18-12 (Part Level Submission)
The following data are from the income statements of Haskin Company.
2015 2014
Sales $6,420,000 $6,240,000
Beginning inventory 940,000 860,000
Purchases 4,340,000 4,661,000
Ending inventory 1,020,000 940,000
(a1)
Compute for each year the inventory turnover. (Round answers to 1 decimal place, e.g. 1.6.)
2015 2014
Inventory turnover times
times
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Brief Exercise 18-13
Guo Company has owners’ equity of $400,000 and net income of $66,000. It has a payout ratio of 20% and a return on assets of 15%.
How much did Guo pay in cash dividends, and what were its average assets? (Round answers to 0 decimal places, e.g. 125.)
Cash dividends $
Average assets $
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Exercise 18-2
Operating data for Navarro Corporation are presented below.
2015 2014
Net sales $750,000 $600,000
Cost of goods sold 465,000 390,000
Selling expenses 105,000 66,000
Administrative expenses 60,000 54,000
Income tax expense 36,000 27,000
Net income 84,000 63,000
Prepare a schedule showing a vertical analysis for 2015 and 2014. (Round answers to 1 decimal place, e.g. 48.5%.)
NAVARRO CORPORATION
Condensed Income Statements
For the Years Ended December 31
2015 2014
Amount Percent Amount Percent
Net sales $750,000 %
$600,000 %
Cost of goods sold 465,000 %
390,000 %
Gross profit 285,000 %
210,000 %
Selling expenses 105,000 %
66,000 %
Administrative expenses 60,000 %
54,000 %
Total operating expenses 165,000 %
120,000 %
Income before income taxes 120,000 %
90,000 %
Income taxes expense 36,000 %
27,000 %
Net income $84,000 %
$63,000 %
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Exercise 18-5
Suppose Nordstrom, Inc., which operates department stores in numerous states, has the following selected financial statement data for the year ending January 30, 2014.
NORDSTORM, INC.
Balance Sheet (partial)
(in millions) End-of-Year Beginning-of-Year
Cash and cash equivalents $ 795 $ 72
Accounts receivable (net) 2,035 1,942
Inventory 898 900
Prepaid expenses 88 93
Other current assets 238 210
Total current assets $4,054 $3,217
Total current liabilities $2,014 $1,601
For the year, net sales were $8,258 and cost of goods sold was $5,328 (in millions).
(a)
Compute the four liquidity ratios at the end of the year. (Round answers to 1 decimal place, e.g. 1.6 .)
Current ratio
:1
Acid-test ratio
:1
Accounts receivable turnover
times
Inventory turnover
times
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