Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Chapter 13, Problem 13.8E
To determine
To Compute: the
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Revenue and expense data for Soldner Inc. are as follows:
2014 2013
Sales $1,500,000 $1,450,000
Cost of goodssold 930,000 812,000
Selling expenses 210,000 261,000
Administrative expenses 255,000 232,000
Income tax expense 52,500 72,500
a. Prepare an income statement in comparative form, stating each item for both 2014 and 2013 as a percent of sales. Round to one decimal place.
b. Comment on the significant changes disclosed by the comparative income statement.
Comparative financial statement data for Flounder Corp. and Blue Spruce Corp., two competitors, appear below. All balance sheet data are as of December 31, 2017.
Flounder Corp.
Blue Spruce Corp.
2017
2017
Net sales
$1,908,000
$657,200
Cost of goods sold
1,245,500
360,400
Operating expenses
299,980
103,880
Interest expense
9,540
4,028
Income tax expense
90,100
38,160
Current assets
444,000
199,036
Plant assets (net)
563,920
148,112
Current liabilities
70,305
35,739
Long-term liabilities
115,010
43,125
Net cash provided by operating activities
146,280
38,160
Capital expenditures
95,400
21,200
Dividends paid on common stock
38,160
15,900
Weighted-average number of shares outstanding
80,000
50,000
(a)Compute the net income and earnings per share for each company for 2017. (Round Earnings per share to 2 decimal places, e.g. $2.78.)
Net Income
Earnings per share
Flounder Corp.
$…
Comparative statement data for Douglas Company and Maulder Company, two com-petitors, appear below. All balance sheet data are as of December 31, 2011, and December 31,2010.Douglas Company Maulder Company2011 2010 2011 2010Net sales $1,549,035 $339,038Cost of goods sold 1,080,490 241,000Operating expenses 302,275 79,000Interest expense 8,980 2,252Income tax expense 54,500 6,650Current assets 325,975 $312,410 83,336 $ 79,467Plant assets (net) 521,310 500,000 139,728 125,812Current liabilities 65,325 75,815 35,348 30,281Long-term liabilities 108,500 90,000 29,620 25,000Common stock, $10 par 500,000 500,000 120,000 120,000Retained earnings 173,460 146,595 38,096 29,998Instructions(a) Prepare a vertical analysis of the 2011 income statement data for Douglas Company andMaulder Company in columnar form.(b) Comment on the relative profitability of the companies by computing the returnon assets and the return on common stockholders’ equity ratios for both companies.
Chapter 13 Solutions
Fundamentals of Financial Accounting
Ch. 13 - What is the general goal of trend analysis?Ch. 13 - Prob. 2QCh. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What benchmarks are commonly used for interpreting...Ch. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Slow Cellars current ratio increased from 1.2 to...Ch. 13 - From last year to this year, Colossal Companys...Ch. 13 - From last year to this year, Berry Bam reported...Ch. 13 - Explain whether the following situations, taken...
Ch. 13 - What are the two essential characteristics of...Ch. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - 1. Which of the following ratios is not used to...Ch. 13 - Prob. 2MCCh. 13 - Prob. 3MCCh. 13 - Analysts use ratios to a. Compare different...Ch. 13 - Which of the following ratios incorporates stock...Ch. 13 - Prob. 6MCCh. 13 - Prob. 7MCCh. 13 - A bank is least likely to use which of the...Ch. 13 - Prob. 9MCCh. 13 - (Supplement 13A) Which of the following items is...Ch. 13 - Calculations for Horizontal Analyses Using the...Ch. 13 - Calculations for Vertical Analyses Refer to M13-1....Ch. 13 - Interpreting Horizontal Analyses Refer to the...Ch. 13 - Interpreting Vertical Analyses Refer to the...Ch. 13 - Prob. 13.5MECh. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Inferring Financial Information Using the Current...Ch. 13 - Prob. 13.10MECh. 13 - Identifying Relevant Ratios Identify the ratio...Ch. 13 - Prob. 13.12MECh. 13 - Analyzing the Impact of Accounting Alternatives...Ch. 13 - Describing the Effect of Accounting Decisions on...Ch. 13 - Prob. 13.1ECh. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Computing Profitability Ratios Use the information...Ch. 13 - Prob. 13.5ECh. 13 - Matching Each Ratio with Its Computational Formula...Ch. 13 - Computing and Interpreting Selected Liquidity...Ch. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Prob. 13.11ECh. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.14ECh. 13 - Analyzing the Impact of Alternative Inventory...Ch. 13 - Prob. 13.1CPCh. 13 - Analyzing Comparative Financial Statements Using...Ch. 13 - Prob. 13.3CPCh. 13 - Prob. 13.4CPCh. 13 - Prob. 13.5CPCh. 13 - Prob. 13.6CPCh. 13 - Prob. 13.7CPCh. 13 - Prob. 13.1PACh. 13 - Analyzing Comparative Financial Statements Using...Ch. 13 - Prob. 13.3PACh. 13 - Prob. 13.4PACh. 13 - Interpreting Profitability, Liquidity, Solvency,...Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 13.7PACh. 13 - Prob. 13.1PBCh. 13 - Prob. 13.2PBCh. 13 - Prob. 13.3PBCh. 13 - Prob. 13.4PBCh. 13 - Interpreting Profitability, Liquidity, Solvency,...Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 13.7PBCh. 13 - Prob. 13.1SDCCh. 13 - Prob. 13.2SDCCh. 13 - Prob. 13.5SDCCh. 13 - Prob. 13.6SDCCh. 13 - Prob. 13.7SDCCh. 13 - Prob. 13.1CC
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- 10: Application of Financial Ratios Used to Measure Profitability The income statement of Garnet Mfg. Corp. for 2018 shows the following: Sales, net P 700,000 15,000 400,000 Net credit sales Cost of goods sold Cost of goods manufactured Net credit purchases 410,000 150,000 225,000 90,000 212,500 20,000 Raw materials used Net income Total operating expenses Depreciation Net income 90,000 The balance sheet figures as of December 31, 2017 and 2018 are as follows: December 31 2017 2018 P12,500 P 25,000 Cash 17,500 28,750 Marketable securities 10,000 20,000 Accounts receivable, net Inventories: 25,000 35,000 Finished goods Work in process 22,500 15,000 3,750 P 150,000 37,500 17,500 10,000 Raw materials Prepaid expenses Total current assets 2,500 P95,000 37,500 Investments 117,500 187,500 Plant, property and equipment, netarrow_forwardSelected information from the comparative financial statements of Barcelona Company for the year ended December 31 appears below: 2017 2016 Accounts receivable (net) $200,000 175,000 Inventory 170,000 130,000 Total assets 1,100,000 800,000 Current liabilities 140,000 110,000 Long-term debt 300,000 410,000 Net credit sales 900,000 700,000 Cost of goods sold 530,000 600,000 Interest expense 40,000 25,000 Income tax expense 60,000 29,000 Net income 120,000 85,000 Net cash provided by operating activities 250,000 135,000 Instructions Answer the following questions relating to the year ended December 31, 2017. Show computations. 1. The inventory turnover for 2017 is 2. The number of times interest earned in 2017 is 3. The accounts receivable turnover for 2017 is 4. The return on assets for 2017 isarrow_forwardSelected comparative statement data for Oriole Company are presented below. All balance sheet data are as of December 31. 20222021Net sales$1,165,000 $1,125,000Cost of goods sold705,000 645,000Interest expense20,000 15,000Net income154,945 145,000Accounts receivable145,000 125,000Inventory105,000 100,000Total assets785,000 700,000Preferred stock (6%)205,000 200,000Total stockholders’ equity635,000 525,000 Compute the following ratios for 2022. (Round answers to 1 decimal place, e.g. 1.8 or 2.5%) (a)Profit marginenter the profit margin in percentages %(b)Asset turnoverenter the asset turnover in times times(c)Return on assetsenter the return on assets in percentages %(d)Return on common stockholders’ equityenter the return on common stockholders' equity in percentages %arrow_forward
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