A B с 1 Marco Company 2 Balance Sheet 3 D E F G H December 31 Current Year 1 Year Ago 2 Years Ago Year over year change Current vs Previous Year $ % Common Sized Current Year $ 1 Year Ago % 4 Assets 5 Cash 31,800 35,625 37,800 6 Accounts receivable, net 89,500 62,500 50,200 7 Merchandise inventory 112,500 82,500 54,000 8 Prepaid expenses 10,700 9,375 5,000 9 Plant assets, net 278,500 255,000 230,500 10 Total assets 523,000 445,000 377,500 11 Liabilities and Equity 12 Accounts payable 129,900 75,250 51,250 13 Long-term notes payable 98,500 101,500 83,500 14 Common stock, $10 par value 163,500 163,500 163,500 15 Retained earnings 131,100 104,750 79,250 16 Total liabilities and equity 523,000 445,000 377,500 17 18 Marco Company December 31 Year over year change Common Sized 19 Income Statement Current Year 1 Year Ago 20 Current vs Previous Year $ % Current Year 1 Year Ago $ % 21 Sales $673,500 $532,000 22 23 Cost of goods sold $411,225 $345,500 24 Other operating expenses 209,550 134,980 25 Interest expense 12,100 13,300 26 Income tax expense 9,525 8,845 27 Total costs and expenses 642,400 502,625 28 29 Net income $31,100 $29,375 30 31 Answer the following questions: 32 1. For the current year, what is the largest asset on the balance sheet (use common sized computations) 33 2. What is the only asset to have an year over year decline (use year over year change computations) 34 3. What does the reduction in long term notes payable from 1 year ago to current year indicate 35 36 37 32 4. Based on the balance sheet, did the Company issue any stocks in the current year 5. As the Company's sales grow, it is normal for the Accounts Receivable to grow as well. Compare the year over year change in Sales to year over year change in Accounts Receivable and indicate whether change in Accounts receivable is in line with change in Sales 6. As the Company's cost of goods sold grow, it is normal for the inventory to grow as well. Compare the year over year change in COGS to year over year change in Inventory and indicate whether change in inventory is in line with change in COGS 7. What is the only expense on the income statement to decline (use year over year change computations) 38 39 8. Did the Company's Net Margin (Net Income as a % of sales) increase or decrease from 1 year ago 40 9. Which expense line item do you think was the main contributor to the change in net margin in #Q8 above 41 10. Using the year over year % change in Sales and COGS, can you tell how the gross margin of the company has changed.

A B с 1 Marco Company 2 Balance Sheet 3 D E F G H December 31 Current Year 1 Year Ago 2 Years Ago Year over year change Current vs Previous Year $ % Common Sized Current Year $ 1 Year Ago % 4 Assets 5 Cash 31,800 35,625 37,800 6 Accounts receivable, net 89,500 62,500 50,200 7 Merchandise inventory 112,500 82,500 54,000 8 Prepaid expenses 10,700 9,375 5,000 9 Plant assets, net 278,500 255,000 230,500 10 Total assets 523,000 445,000 377,500 11 Liabilities and Equity 12 Accounts payable 129,900 75,250 51,250 13 Long-term notes payable 98,500 101,500 83,500 14 Common stock, $10 par value 163,500 163,500 163,500 15 Retained earnings 131,100 104,750 79,250 16 Total liabilities and equity 523,000 445,000 377,500 17 18 Marco Company December 31 Year over year change Common Sized 19 Income Statement Current Year 1 Year Ago 20 Current vs Previous Year $ % Current Year 1 Year Ago $ % 21 Sales $673,500 $532,000 22 23 Cost of goods sold $411,225 $345,500 24 Other operating expenses 209,550 134,980 25 Interest expense 12,100 13,300 26 Income tax expense 9,525 8,845 27 Total costs and expenses 642,400 502,625 28 29 Net income $31,100 $29,375 30 31 Answer the following questions: 32 1. For the current year, what is the largest asset on the balance sheet (use common sized computations) 33 2. What is the only asset to have an year over year decline (use year over year change computations) 34 3. What does the reduction in long term notes payable from 1 year ago to current year indicate 35 36 37 32 4. Based on the balance sheet, did the Company issue any stocks in the current year 5. As the Company's sales grow, it is normal for the Accounts Receivable to grow as well. Compare the year over year change in Sales to year over year change in Accounts Receivable and indicate whether change in Accounts receivable is in line with change in Sales 6. As the Company's cost of goods sold grow, it is normal for the inventory to grow as well. Compare the year over year change in COGS to year over year change in Inventory and indicate whether change in inventory is in line with change in COGS 7. What is the only expense on the income statement to decline (use year over year change computations) 38 39 8. Did the Company's Net Margin (Net Income as a % of sales) increase or decrease from 1 year ago 40 9. Which expense line item do you think was the main contributor to the change in net margin in #Q8 above 41 10. Using the year over year % change in Sales and COGS, can you tell how the gross margin of the company has changed.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.5.1MBA

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