Reference no: EM133132773

Question 1 - Selected financial information for DMA Corp. for a six-year period follows:

(Amounts in thousands)	2020	2019	2018	2017	2016	2015
Net sales	$1,806	$1,757	$1,606	$1,704	$1,638	$1,588
Net income	144	120	89	126	100	96
Ending common shareholders' equity	940	860	772	684	628	600

Required -

1. Prepare a horizontal analysis to compare 2020 to 2019. Which accounts increased the most?

2. Compute trend percentages for 2016 through 2020, using 2015 as the base year.

3. From the above data, what can we infer about expenses from 2015 through 2020?

Question 2 - The president of Mackey Car Parts, Inc. has asked you to compare the company's profit performance and financial position with the averages for the industry. The accounting office has given you the company's income statement and balance sheet, as well as the industry average data for competitors:

Mackey Car Parts, Inc. Income Statement Compared with Industry Average For the Year Ended December 31, 2020
	Mackey	Industry
	Car Parts	Average
Net sales	$778,000	100.00%
Cost of goods sold	522,816	65.8
Gross margin	255,184	34.2
Operating expenses	161,046	19.7
Operating income	94,138	14.5
Other expenses	4,668	0.4
Net income	$89,470	14.10%

 

Mackey Car Parts, Inc. Balance Sheet Compared with Industry Average 31-Dec-20
	Mackey	Industry
	Car Parts	Average
Current assets	$325,440	70.90%
Property, plant, and equipment	120,960	23.6
Intangible assets, Net	8,640	0.8
Other assets	24,960	4.7
Total assets	$480,000	100.00%
Current liabilities	$222,720	48.10%
Long-term liabilities	107,520	16.6
Total liabilities	330,240	64.7
Shareholders' equity	149,760	35.3
Total liabilities and shareholders' equity	$480,000	100.00%

Required -

1. Make a vertical analysis for Mackey for both its income statement and balance sheet.

2. Compare the company's gross margin percentage (gross margin as a percent of net sales) with the average for the industry. Comment on their investment in assets compared to the industry information shown.