Financial Analysis ActivityComparative statement data for P Company and Q Company-competitors-appear on the following page.P CompanyQ Company2003200220032002$100,00030,000Net sales$80,000Gross profitOperating expensesAmortization expenseInterest expense30,00020,0001,50015,0001,000400500Income tax expense1,00012,6002,0006,000Net incomeCash1,00010,00040,0001,00011,00030,0004,00024,0007,000Accounts receivable22,0008,00020,0004,000Other current assetsCapital assets (net)62,60030,00021,00040,00022,600110,00092,00021,0005,000Current liabilitiesLong-term liabilitiesCommon stock10,00040,00010,00028,0001,00023,00027,0001,00017,000Retained earningsInstructions(a) Prepare a vertical analysis of the 2003 income statement data for P and Q.(b) Compute the return on common shareholders' equity for both companies for 2003.(c) Compare receivable collections between the two companies for 2003.(d) Compare the short-term liquidity of the two companies for 2003.

Note: As per our guidelines, only the first three subparts will be answered (a) Condensed…

Financial Analysis Activity Comparative statement data for P Company and Q Company-competitors-appear on the following page. P Company Q Company 2003 2002 2003 2002 $80,000 30,000 $100,000 30,000 15,000 1,000 Net sales Gross profit Operating expenses Amortization expense Interest expense Income tax expense 20,000 1,500 400 500 1,000 2,000 Net income 12,600 6,000 1,000 10,000 40,000 62,600 30,000 21,000 40,000 22,600 1,000 11,000 30,000 110,000 Cash 4,000 Accounts receivable 22,000 24,000 7,000 21,000 5,000 27,000 1,000 17,000 Other current assets 8,000 20,000 4,000 28,000 1,000 23,000 Capital assets (net) 92,000 10,000 40,000 10,000 Current liabilities Long-term liabilities Common stock Retained earnings Instructions (a) Prepare a vertical analysis of the 2003 income statement data for P and Q. (b) Compute the return on common shareholders' equity for both companies for 2003. (c) Compare receivable collections between the two companies for 2003. (d) Compare the short-term liquidity of the two companies for 2003.

Financial Analysis Activity Comparative statement data for P Company and Q Company-competitors-appear on the following page. P Company Q Company 2003 2002 2003 2002 $80,000 30,000 $100,000 30,000 15,000 1,000 Net sales Gross profit Operating expenses Amortization expense Interest expense Income tax expense 20,000 1,500 400 500 1,000 2,000 Net income 12,600 6,000 1,000 10,000 40,000 62,600 30,000 21,000 40,000 22,600 1,000 11,000 30,000 110,000 Cash 4,000 Accounts receivable 22,000 24,000 7,000 21,000 5,000 27,000 1,000 17,000 Other current assets 8,000 20,000 4,000 28,000 1,000 23,000 Capital assets (net) 92,000 10,000 40,000 10,000 Current liabilities Long-term liabilities Common stock Retained earnings Instructions (a) Prepare a vertical analysis of the 2003 income statement data for P and Q. (b) Compute the return on common shareholders' equity for both companies for 2003. (c) Compare receivable collections between the two companies for 2003. (d) Compare the short-term liquidity of the two companies for 2003.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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