BUS.WK8,6
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Problem 14.8 (LO3) Comparing Bell and Gangway Financial information for Bell and Gangway (two computer manufacturers) follows: Bell Gangway Year Ended Year Ended Year Ended Year Ended (in millions) 12/31/2020 12/31/2019 12/31/2020 12/31/2019 Sales $61,133 $57,420 $8,922 $8,457 Cost of sales 49,462 47,904 7,316 6,951 Gross margin $11,671 $ 9,516 §1,606 $1,506 Inventory $ 1,180 S 660 S 400 s 351 Required a. Compare Bell and Gangway in terms of their percentage changes in sales and gross margin. b. Compare Bell and Gangway in (erms of their gross Margin percentages. ¢. Compare Bell and Gangway in terms of inventory turnover and days' sales in inventory d. . In your opinion, which firm has had better financial performance? Support your answer using your calculations in parts a, b, and c. Problem 12.3 (LO2) Return on Investment Consider the following information for McKinley and Son: 12/31/2020 12/31/2021 Total assets $55,000,000 $62,000,000 Noninterest-bearing current liabilities 1,100,000 1,320,000 Net income 3,300,000 3,400,000 Interest expense 726,000 770,000 Tax rate 20% 20% Required a. Calculate ROI for 2020 and 2021. Round ROI to four decimal places. b. While income has increased in fiscal 2021, is it clear that the company’s performance has improved?
TP Problem 14.6 (L03) Analyzing Financial Ratios and Cash Flows Venture Auto Parts is chain of 40 stores offerng a full ine of auto parts and supplics to consumers and independent auto repair shops. Danny’s Brake and Mufler has over 90 storesin the cities serviced by Venture. Recently, Danny Morton. the founder of Danny s Brake and Muler,was approached by Venture with an ineresting offe. Venture Veants to be the sole supplicr of mufflcrs and brake part to Danny's. In exchange, Venture wil invest | in technology to monitor Danny's inventory levels and make timely deliveries o all locations. Venture ' fasserts thatthie el willea to lower part prices and greater inventory turnover for Danny's. I 0 s e o negation, Dasny's chetsountans, Sass Wikon, was ssigred the task of analyzing the confidential audited financial statements of Venture. As part of her work, Sarah | | calculated the following ratios and obtained Venture's statement o cash flows for iscal 2021 Lo | | Fiscal 2021 Fiscal 2020 | Cartentratio 165 155 Quickratio om 050 I Inventory tarnover 10 s& Debt o cquity 300 23 B ‘Times interest carned 110 20 | Venture Auto Parts Statement of Cash Flows Year Ended December 31,2021 | Cash Provided from Operations | Netcamings s 900000 | Reconclsion ofnet carings o nc cash provided by aperstions: Deprecition and amortization 500000 Increase in receivables (3500000) Increasein merchandie inventories (1100000) | ey s | Increas i income taxes payable 100000 Net cash provided by operations 6100000 Cash flows from investing actvities Purchase of Dundee Stores Purchase of property Net cash used in investing activities Cash flows from financing activities Proceeds from long-term borrowings Net cash provided by financing activities Increase fn cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Required Based on thislimited information, would you recommend that Danny pursue the deal with Venture?
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2022
2023
Year
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2,490,e0e
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Loss on sale of land
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Income tax expense
Total expenses
965,e00
40,000
23,000
9,000
1,837,000
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868,eee
32,000
9,000
20,000
58,000
987,000
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December 31
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2821
2020
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98,000
148, 000
15,000
$196,000
91,000
115,000
13,000
$154,000
70,000
145,e0e
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115,000
310,000
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