Reference no: EM131209503
E14-4 The comparative condensed income statements of Emley Corporation are shown below.
|
EMLEY CORPORATION
Comparative Condensed Income Statements
For the Years Ended December 31
|
|
|
2017
|
2016
|
|
Net sales
|
$660,000
|
$600,000
|
|
Cost of goods sold
|
483,000
|
420,000
|
|
Gross profit
|
I 77,000
|
180,000
|
|
Operating expenses
|
125,000
|
120,000
|
|
Net income
|
$ 52,000
|
$ 60,000
|
Instructions
(a) Prepare a horizontal analysis of the income statement data for Emley Corporation using 2016 as a base. (Show the amounts of increase or decrease.)
(b) Prepare a vertical analysis of the income statement data for Emley Corporation in columnar form for both years.
E14-7 Frizell Company has the following comparative balance sheet data.
|
FRIZELL COMPANY
Balance Sheets
December 31
|
|
|
2017
|
2016
|
|
Cash
|
$ 15,000
|
$ 30,000
|
|
Accounts receivable (net)
|
70,000
|
60,000
|
|
Inventory
|
60,000
|
50,000
|
|
Plant assets (net)
|
200,000
|
180,000
|
|
|
$345,000
|
$320,000
|
|
Accounts payable
|
$ 50,000
|
$ 60,000
|
|
Mortgage payable (6%)
|
100,000
|
100,000
|
|
Common stock, $10 par
|
140,000
|
120,000
|
|
Retained earnings
|
55,000
|
40,000
|
|
|
$345,000
|
$320,000
|
Additional information for 2017:
1. Net income was $25,000.
2. Sales on account were $410,000. Sales returns and allowances were 520,000.
3. Cost of goods sold was $198,000.
Instructions
Compute the following ratios at December 31, 2017.
(a) Current ratio.
(b) Acid-test ratio.
(c) Accounts receivable turnover.
(d) Inventory turnover.
E14-11 Wiemers Corporation's comparative balance sheets are presented below.
|
WIEMERS CORPORATION
Balance Sheets
December 31
|
|
|
2017
|
2016
|
|
Cash
|
$ 4,300
|
$ 3,700
|
|
Accounts receivable (net)
|
21,200
|
23,400
|
|
Inventory
|
10,000
|
7,000
|
|
Land
|
20,000
|
26,000
|
|
Buildings
|
70,000
|
70,000
|
|
Accumulated depreciation-buildings
|
(15,000)
|
(10,000)
|
|
Total
|
$110,500
|
$120,100
|
|
Accounts payable
|
$ 12,370
|
$ 31,100
|
|
Common stock
|
75,000
|
69,000
|
|
Retained earnings
|
23,130
|
20,000
|
|
Total
|
$110,500
|
S120,100
|
Wiemmjs 2017 income statement included net sales of $100,000, cost of goods sold of $60,000, and net income of $15,000.
Instructions
Compute the following ratios For 2017,
(a) Current ratio.
(b) Acid-test ratio.
(c) Accounts receivable turnover.
(d) Inventory turnover,
(e) Profit margin.
(f) Asset turnover.
(g) Return on assets.
(h) Return on common stockholders' equity
(i) Debt to assets ratio.
P14-5 Selected financial data of Target Corporation and Wal-Mart Stores, Inc., for a recent year are presented here (in millions).
|
|
Target
Corporation
|
Wal-Mart
Stores, Inc.
|
|
income Statement Data for Year
|
|
Net sales
|
$61,471
|
$374,526
|
|
Cost of goods sold
|
41,895
|
286,515
|
|
Selling and administrative expenses
|
16,200
|
70,847
|
|
Interest expense
|
647
|
1,798
|
|
Other income (expense)
|
1,896
|
4,273
|
|
Income tax expense
|
1,776
|
6,908
|
|
Net income
|
$ 2,849
|
$ 12,731
|
|
|
Balance Sheet Data (End of Year)
|
|
Current assets
|
$18,906
|
$ 47,585
|
|
Noncurrent assets
|
25,654
|
115,929
|
|
Total assets
|
$44,560
|
$163,514
|
|
Current liabilities
|
$11,782
|
$ 58,454
|
|
Long-term debt
|
17,471
|
40,452
|
|
Total stockholders' equity
|
15,307
|
64,608
|
|
Total liabilities and stockholders' equity
|
$44,560
|
$163,514
|
|
|
Target
Corporation
|
Wal-Mart
Stores, Inc.
|
|
Beginning-of-Year Balances
|
|
Total assets
|
$37,349
|
$151,587
|
|
Total stockholders' equity
|
15,633
|
61,573
|
|
Current liabilities
|
11,117
|
52,148
|
|
Total liabilities
|
21,716
|
90,014
|
|
|
Other Data
|
|
Average net accounts receivable
|
$ 7,124
|
$ 3,247
|
|
Average inventory
|
6,517
|
34,433
|
|
Net cash provided by operating activities
|
4,125
|
20,354
|
Instructions
(a) For each company, compute the following ratios. 4,125 20,354
(1) Current ratio.
(2) Accounts receivable turnover.
(3) Average collection period.
(4) Inventory turnover.
(5) Days in inventory.
(6) Profit margin.
(7) Asset turnover.
(8) Return on assets.
(9) Return on common stockholders' equity.
(10) Debt to assets ratio.
(11) Times interest earned.
(b) Compare the liquidity, profitability, and solvency of the two companies.
|
Locate the points where monopoly welfare loss occurs
: Using figure 11.3, locate the points where monopoly welfare loss (in units of good 2) occurs in the diagram. Show that this increases the higher the monopoly price is relative to the competitive price.
|
|
Choosing the right cost of capital
: The risk-free rate equals 7%, and the expected risk premium on the market portfolio equals 7%. A particular company has bonds outstanding that offer investors a yield to maturity of 7.5%.
|
|
What is disintermediation and when is it likely to occur
: If I take my funds out of my credit union and put them in a money market mutual fund, have I disintermediated? Why or why not?
|
|
Value for a middle-income investor
: For a high-income investor in the 40% tax bracket, compute the taxable equivalent yield for amuni bond yielding 5%. Calculate this same value for a middle-income investor in the 30% tax bracket.
|
|
Prepare a vertical analysis of the income statement data
: Prepare a horizontal analysis of the income statement data for Emley Corporation using 2016 as a base. Prepare a vertical analysis of the income statement data for Emley Corporation in columnar form for both years.
|
|
Show that the profit-maximizing strategy consists of bidding
: Show that if you submit a bid of B, the probability that you win the contest is the probability that your bid B will exceed your rival's bid, and that this probability of winning is B/250.
|
|
Prepare a loan amoritization schedule for loan
: Determine the annual payment on a $15000 loan that is to be amoritized over a four year period and carries a 10 percent interest rate. Prepare a loan amoritization schedule for this loan
|
|
Discuss the roles that technology and regulation play
: Discuss the roles that technology and regulation play in aiding financial innovation.- Will innovation always occur to exploit loopholes in regulations?
|
|
Present value of a loan that calls
: What is the present value of a loan that calls for the payment of $500 per year for six years if the discount rate is 10% and the first payment will be made one year from now? How would your answer change if the $500 per year for occurred for ten..
|