Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

Question

Financial data for Hunger Games Company for last year appear below: Hunger Games Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash $120,700 $220,000 Accounts receivable 225,000 475,000 Inventory 317,000 390,000 Plant and equipment (net) 940,000 860,000 Investment in Katniss Company 100,000 98,000 Land (undeveloped) 198,000 65,000 Total assets $1,900,700 $2,108,000 Liabilities and owners' equity: Accounts payable $178,700 $8,000 Long-term debt 512,000 600,000 Owners' equity 1,210,000 1,500,000 Total liabilities and owners' $1,900,700 $2,108,000 equity

Answer 1

Question

Chapter 21, Problem 2MAD

a.

To determine

Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

b.

To determine

Determine the earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three segments.

c.

To determine

Determine the EBITDA as a percent of sales (EBITDA margin) for the three segments.

d.

To determine

Interpret the analysis in EBITDA margin calculated in Part C.

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Financial data for Hunger Games Company for last year appear below: Hunger Games Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash $120,700 $220,000 Accounts receivable 225,000 475,000 Inventory 317,000 390,000 Plant and equipment (net) 940,000 860,000 Investment in Katniss Company 100,000 98,000 Land (undeveloped) 198,000 65,000 Total assets $1,900,700 $2,108,000 Liabilities and owners' equity: Accounts payable $178,700 $8,000 Long-term debt 512,000 600,000 Owners' equity 1,210,000 1,500,000 Total liabilities and owners' $1,900,700 $2,108,000 equity

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Answer 2

Question

Chapter 21, Problem 2MAD

a.

To determine

Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

b.

To determine

Determine the earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three segments.

c.

To determine

Determine the EBITDA as a percent of sales (EBITDA margin) for the three segments.

d.

To determine

Interpret the analysis in EBITDA margin calculated in Part C.

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Answer 3

Question

Chapter 21, Problem 2MAD

a.

To determine

Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

b.

To determine

Determine the earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three segments.

c.

To determine

Determine the EBITDA as a percent of sales (EBITDA margin) for the three segments.

d.

To determine

Interpret the analysis in EBITDA margin calculated in Part C.

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Answer 4

Question

Chapter 21, Problem 2MAD

a.

To determine

Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

b.

To determine

Determine the earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three segments.

c.

To determine

Determine the EBITDA as a percent of sales (EBITDA margin) for the three segments.

d.

To determine

Interpret the analysis in EBITDA margin calculated in Part C.

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Answer 5

Chapter 21, Problem 2MAD

a.

To determine

Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

b.

To determine

Determine the earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three segments.

c.

To determine

Determine the EBITDA as a percent of sales (EBITDA margin) for the three segments.

d.

To determine

Interpret the analysis in EBITDA margin calculated in Part C.

Answer 6

Chapter 21, Problem 2MAD

a.

To determine

Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

Answer 7

Chapter 21, Problem 2MAD

a.

To determine

Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

Answer 8

b.

To determine

Determine the earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three segments.

Answer 9

b.

To determine

Determine the earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three segments.

Answer 10

c.

To determine

Determine the EBITDA as a percent of sales (EBITDA margin) for the three segments.

Answer 11

c.

To determine

Determine the EBITDA as a percent of sales (EBITDA margin) for the three segments.

Answer 12

d.

To determine

Interpret the analysis in EBITDA margin calculated in Part C.

Answer 13

d.

To determine

Interpret the analysis in EBITDA margin calculated in Part C.

Answer 14

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Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

Solution Summary: The author explains the method of vertical analysis, which is useful for evaluating company’s performance and financial condition.

Prepare a vertical analysis of the sales as a percent of total sales for the three segments, and identify the segment which has highest percentage of total sales.

Determine the earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three segments.

Determine the EBITDA as a percent of sales (EBITDA margin) for the three segments.

Interpret the analysis in EBITDA margin calculated in Part C.

Chapter 21 Solutions