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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Question
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
Transcribed Image Text: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.
Transcribed Image Text: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.
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