Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem 1FSC
Financial Statement Analysis Case: Revlon
The following information is from the 2016 financial statements of Revlon, the beauty products company.
| At December 31 | 2016 | 2015 | 2014 |
| $ 423.9 | $ 244.9 | $ 238 9 | |
| Inventories | 424.6 | 183.8 | 156.6 |
| Accounts Payable | 296.9 | 201.3 | 153.5 |
Income Statement Information
| For the year | 2016 | 2015 | 2014 |
| Sales (all credit) | $2,334.0 | $1,914.3 | $1,941.0 |
| Cost of Goods Sold | 917.1 | 667.8 | 668 3 |
Required
Use Revlon’s financial information to answer the following questions:
a. What is Revlon’s operating cycle (in days) in 2016 and 2015? Comment on the change from year to year.
b. What is Revlon’s cash operating cycle (in days) in 2016 and 2015? Comment on the change from year to year
c. Use Revlon’s financial information to compare the components of Revlon’s operating cycle and cash operating cycle to L’Oréal’s for 2016. The following table provides the amounts for L’Oréal from worked Example 9.17 in the text.
| Component | L’Oréal 2016 | Revlon 2016 |
| Accounts receivable turnover ratio | 6.83 | ______ |
| Days sales outstanding | 53.44 | ______ |
| Inventory turnover ratio | 2.86 | ______ |
| Days inventory on hand | 127.62 | ______ |
| Accounts payable turnover ratio | 1.82 | ______ |
| Days accounts payable outstanding | 200.55 | ______ |
| Operating cycle | 181.06 | ______ |
| Cash operating cycle | 19.49 | ______ |
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Return on SalesThe following financial data is from Hi-Tech Instruments' financial statements (thousands of dollars, except earnings per share.)
2016
Sales revenue
$211,000
Cost of goods sold
125,000
Net income
8,800
Dividends
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Earnings per share
4.40
Hi-Tech Instruments, Inc.Balance Sheet
(Thousands of Dollars)
Dec. 31, 2016
Dec. 31, 2015
Assets
Cash
$18,300
$18,000
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41,000
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43,700
Total current assets
103,800
102,700
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52,600
50,500
Other assets
15,600
13,800
Total assets
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$167,000
Liabilities and Stockholders' Equity
Notes payable-banks
$6,000
$6,000
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18,700
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16,500
21,000
Total current liabilities
45,000
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9% Bonds payable
40,000
40,000
Total liabilities
85,000
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Common stock, $25 par value (2,000,000 shares)
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Retained earnings
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89,599
Net income
7,013
Chapter 9 Solutions
Intermediate Accounting (2nd Edition)
Ch. 9 - Prob. 9.1QCh. 9 - Do companies always classify cash as a current...Ch. 9 - Prob. 9.3QCh. 9 - Do accountants typically measure accounts...Ch. 9 - Under the allowance method, will the actual...Ch. 9 - How does an entity record a subsequent recovery of...Ch. 9 - Does the aging of accounts receivable method of...Ch. 9 - What is the difference between pledging accounts...Ch. 9 - How do companies account for receivables that are...Ch. 9 - Is the face value of a note receivable exchanged...
Ch. 9 - What do firms use to record the sales value of a...Ch. 9 - Explain why a company must have highly effective...Ch. 9 - The following are held by YRT Corporation at...Ch. 9 - Fernandez Company had an accounts receivable...Ch. 9 - On its December 31, Year 2, balance sheet, Red...Ch. 9 - Stanberry Company sold 500,000 of net accounts...Ch. 9 - On November 30, Year 1, Derin Corporation agreed...Ch. 9 - Which of the following disclosures about accounts...Ch. 9 - Prob. 9.1BECh. 9 - Prob. 9.2BECh. 9 - Prob. 9.3BECh. 9 - Prob. 9.4BECh. 9 - Prob. 9.5BECh. 9 - Sales Discounts, Most-Likely-Amount Method. On...Ch. 9 - Allowance for Uncollectible Accounts, Write-Off....Ch. 9 - Allowance for Uncollectible Accounts, Write-Off....Ch. 9 - Allowance for Uncollectible Accounts, Recovery....Ch. 9 - Bad Debt Expense, Journal Entry. Paul Anchor...Ch. 9 - Bad Debt Expense. Journal Entry. Paul Anchor,...Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Prob. 9.14BECh. 9 - Prob. 9.15BECh. 9 - Assigned Receivables. Using the information...Ch. 9 - Factoring Receivables without Recourse. Nicks...Ch. 9 - Prob. 9.18BECh. 9 - Notes Receivable. Welk Associates sold a piece of...Ch. 9 - Prob. 9.20BECh. 9 - Prob. 9.21BECh. 9 - Prob. 9.22BECh. 9 - Internal Controls. Identify whether the following...Ch. 9 - Prob. 9.24BECh. 9 - Prob. 9.25BECh. 9 - Prob. 9.26BECh. 9 - Prob. 9.27BECh. 9 - Prob. 9.28BECh. 9 - Prob. 9.1ECh. 9 - Volume Discounts, Sales Discounts. Sodesta Company...Ch. 9 - Allowance for Uncollectible Accounts, Journal...Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable....Ch. 9 - Bad Debt Expense, Write-Offs, Journal Entry....Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Bad Debt Expense, Percentage of Accounts...Ch. 9 - Prob. 9.9ECh. 9 - Assigning Receivables, Factoring Receivables....Ch. 9 - Prob. 9.11ECh. 9 - Factoring Receivables with and without Recourse....Ch. 9 - Factoring Receivables without Recourse, Factoring...Ch. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Notes Receivable with Year-End Interest Accrual,...Ch. 9 - Prob. 9.18ECh. 9 - Allowance for Uncollectible Accounts, Journal...Ch. 9 - Prob. 9.2PCh. 9 - Allowance for Uncollectible Accounts, Aging of...Ch. 9 - Prob. 9.4PCh. 9 - Bad Debt Expense, Aging of Accounts Receivable....Ch. 9 - Bad Debt Expense, Aging of Accounts Receivable,...Ch. 9 - Prob. 9.7PCh. 9 - Prob. 9.8PCh. 9 - Aging of Accounts Receivable, Write-Offs,...Ch. 9 - Disclosure. Using the transactions listed in P9-9,...Ch. 9 - Accounts Receivable Disclosure. Using Kellogg...Ch. 9 - Prob. 1JCCh. 9 - Financial Statement Analysis Case: Revlon The...Ch. 9 - Prob. 1SSCCh. 9 - Surfing the Standards Case 2: Costs Associated...Ch. 9 - Prob. 1BCC
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