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What type of analysis is indicated by the following?
Increase (Decrease) | ||||
Current Year |
Preceding Year |
Amount | Percent | |
Current assets | $ 430,000 | $ 500,000 | $(70,000) | (14)% |
Fixed assets | 1,740,000 | 1,500,000 | 240,000 | 16 |
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- Mastery Problem: Financial Statement Analysis Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 –- $860,000 - v Current ratio $3,095,000 ÷ $860,000 - Quick ratio $1,866,000 + $860,000 V Accounts receivable turnover $8,260,000 + [($714,000 + $740,000) ÷ 2]° Number of days' sales in receivables [(S714,000 + $740,000) ÷ 21 ÷ ($8,260,000 ÷ 365) ▪ Inventory turnover $4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 21 - Number of days' sales in inventory [($1,072,000 + $1,100,000) ÷ 21 ÷…Compute the annual dollar changes and percent changes for each of the following accounts. (Decreases should be indicated with a minus sign. Round percent change to one decimal place.) Current Year Prior Year Short-term investments $374,634 $234,000 101,e00 88,000 Accounts receivable 97,364 Notes payable Horizontal Analysis - Calculation of Percent Change Choose Numerator: Choose Denominator: Percent change = Current Year Prior Year Dollar Change Percent Change Short-term investments 24 374,634 $ 234,000 Accounts receivable 97,364 101,000 Notes payable 88,000a. Prepare a vertical analysls percents as whole numbers. Versatile Company Income Statements For the Years Ended December 31 20Y5 20Y5 Percent 20Y4 20Y4 Percent Amount Amount Fees earned $793,000 100 % $672,000 100 % Operating expenses 650,260 81 % 591,360 86 % Income from $142,740 19 % $80,640 14 % operations b. Does the vertical analysis indicate a favorable or an unfavorable trend?
- Problem 17-2A (Algo) Ratios, common-size statements, and trend percer [The following information applies to the questions displayed below.] Selected comparative financial statements of Korbin Company follow. KORBIN COMPANY Comparative Income Statements For Years Ended December 31 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total expenses Income before taxes Income tax expense Net income Assets Current assets Long-term investments Plant assets, net Total assets Liabilities and Equity Current liabilities Common stock Other paid-in capital Retained earnings Total liabilities and equity 2021 $546,242 328,838 217,404 77,566 49,162 126,728 90,676 16,866 $ 73,810 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total expenses Income before taxes Income tax expense Net income KORBIN COMPANY Comparative Balance Sheets December 31 2020 $ 418,466 263,634 2021 % 154,832 57,748 36,825 94,573 60, 259 12,353 $ 47,906 % $61,141 0 113,547…8. A company reports the following: Sales Average total assets $5,844,000 3,325,000 Determine the asset turnover ratio. Round to one decimal place.1. HORIZONTAL ANALYSIS Our Company Income Statement December 31, 201A, and 201B Increase/ Decrease % of change (Amount of change 201A 201B (201A-201B) +201A) x 100% Net Sales 180,000.00 240,000.00 Cost of Goods Sold 100,000.00 120,000.00 Gross Profit 80,000.00 120,000.00 Operating Expenses Administrative Expenses 20,000.00 20,000.00 Selling Expenses 10,000.00 12,000.00 Total Operating Expenses 30,000.00 32,000.00 Net Income 50,000.00 88,000.00 2. VERTICAL ANALYSIS Our Company Income Statement December 31, 201A, and 201B 201A 201B Net Sales 180,000.00 100% 240,000.00 100% Cost of Goods Sold 100,000.00 120,000.00 120,000.00 Gross Profit 80,000.00 Operating Expenses Administrative Expenses 20,000.00 20,000.00 Selling Expenses Total Operating Expenses 10,000.00 12,000.00 30,000.00 32,000.00 Net Income 50,000.00 88,000.00
- Year Net Cash Flow Discount Factor Present Value (using the factor) Present Value (using Excel formula) 0 $ (3,500,000.00) 1 $(3,500,000.00) ($3,500,000.00) 1 $900,000.00 0.90909 $818, 181.00 $818, 181.82 2 $ 900,000.00 0.82645 $743,805.00 $743, 801.65 3 $900,000.00 0.75131 $676, 179.00 $676, 183.32 4 $ 900,000.00 0.68301 $614,709.00 $614,712.11 5 $900,000.00 0.62092 $558, 828.00 $558,829.19 Net Present Value $(88,298.00) $(88,291.91) 3. Now assume that inflation is estimated as a 5% increase each year (starting with Year 1) for the entire 5 years. Calculate the new net cash flow values for each year. Hint: You should start with 5% increase for Year 1 net cash flow.A company reports the following: Sales $2,400,000 Average total assets (excluding long-term investments) 1,500,000 Determine the asset turnover ratio. Round your answer to one decimal place.fill in the blank 1The following is an example of Current assets Fixed assets Current Year $ 420,000 1,530,000 a. regression analysis b. horizontal analysis c. net assets analysis d. marketability analysis Prior Year $ 500,000 1,500,000 Increase (Decrease) Amount $(80,000) 30,000 Percent (16%) 2%
- Years Revenue Cash Expense Book Depreciation Book Income Pre-Tax Book Tax at 32% After Tax Book Income Financial Measures Profit Margin % Net Assets ROA % Cashflow Revenue Cash Expense Tax Depreciation Pretax Income Tax at 32% After Tax Income After Tax Cashflow Cumulative Cashflow Payback Period Present Worth 10 PW12 PW15 IRR PV Index(15) Facility Cost Income Tax Rate 0 C. -9.5 d. -12.4 $ 100,000.00 2.2 Years 91740.92679 0.395702526 1 0.684350818 $ 100,000.00 32% $30,000.00 $100,000.00 $120,000.00 $140,000.00 $150,000.00 $150,000.00 $50,000.00 $60,000.00 $70,000.00 $75,000.00 $75,000.00 2 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $0.20 $20,400.00 $27,200.00 $0.26 $9,600.00 $12,800.00 $16,000.00 $17,600.00 $17,600.00 $20,400.00 ($100,000.00) $40,400.00 $51,040.00 ($100,000.00) -$59,600.00 -$8,560.00 $40,000.00 $50,000.00 $55,000.00 $55,000.00 $0.23 3 $0.45 $36,727.27 $80,000.00 $60,000.00 $40,000.00 $20,000.00 $0.85 $1.87 4 $19,040.00 5 $34,000.00 $37,400.00 $0.24…Year Net Cash Flow Discount Factor Present Value (using the factor) Present Value (using Excel formula) 0 $ (3,500,000.00) 1 $ (3,500,000.00) ($3,500,000.00) 1 $ 900,000.00 0.90909 $ 818,181.00 $818,181.82 2 $ 900,000.00 0.82645 $ 743,805.00 $743,801.65 3 $ 900,000.00 0.75131 $ 676,179.00 $676,183.32 4 $ 900,000.00 0.68301 $ 614,709.00 $614,712.11 5 $ 900,000.00 0.62092 $ 558,828.00 $558,829.19 Net Present Value $ (88,298.00) $ (88,291.91) 3. Now assume that inflation is estimated as a 5% increase each year (starting with Year 1) for the entire 5 years. Calculate the new net cash flow values for each year. start with 5% increase for Year 1 net cash flow. Year Net Cash Flow 0 $…A company reports the following: Sales $8,782,430 Average total assets (excluding long-term investments) 1,111,700 Determine the asset turnover ratio. Round your answer to one decimal place.fill in the blank 1
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