Compute the financial data for given year

Assignment Help Financial Accounting
Reference no: EM13859183

Problem 1:

A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:

McKenzie Sales, Ltd.
Comparative Income Statement

This Year

Last Year

Sales

$7,370,000

$5,601,200

Cost of goods sold

4,600,000

3,510,500

Gross margin

2,770,000

2,090,700

Selling and administrative expenses:

 

 

Selling expenses

1,383.000

1,077,000

Administrative expenses

703,000

608,500

Total expenses

2.086.000

1.685.500

Net operating income

684.000

405,200

Interest expense

99,000

90.000

Net income before taxes

$ 585,000

$ 315,200

Members of the company's board of directors are surprised to see that net income increased by only $269,800 when sales increased by $1.768,800.

Required:

1. Express each years income statement in common-size percentages. (Round your percentage answers to 1 decimal place

Problem 2:

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 500,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.50. The market value of the company's common stock at the end of the year was $27. All of the company's sales are on account.
                                                                  Weller Corporation
                                                               Comparative Balance Sheet
                                                                  (dollars In thousands)

Assets

Current assets:

This Yew

Last Year

Cash

$ 1,100

$ 1,280

Accounts receivable, net

9,600

6,900

Inventory

13,400

12,300

Prepaid expenses

610

680

Total current assets

24,710

21,160

Property and equipment:

 

 

Land

10,900

10,900

Buildings and equipment, net

48,910

36,290

 


 

Total property and equipment

59.810

47,190

Total assets

$84.520

$68,350

Liabilities and Stockholders' Equity

 

 

Current liabilities:

 

 

Accounts payable

$20,400

$ 18,600

Accrued liabilities

930

770

Notes payable, short term

290

290

Total current liabilities

21,620

19,660

Long-term liabilities:

 

 

Bonds payable

9.000

9,000

Total liabilities

30,620

28,660

Stockholders' equity:

 

 

Common stock

500

500

Additional paid-in capital

MOO

4,000

Total paid-In capital

4,500

4,500

Retained earnings

49,400

35,190

Total stockholders' equity

53,900

39,690

Total liabilities and stockholders' equity

$84,520

$68,350

                                                                  Weller Corporation
                                               Comparative Income Statement and Reconciliation
                                                                   (dollars in thousands)

 

This Year

Last Year

Sales

$76,000

$65,000

Cost of goods sold

34,000

40,000

Gross margin

42,000

25,000

Selling and administrative expenses:

 

 

Selling expenses

10,600

10,700

Administrative expenses

6.400

6,400

Total selling and administrative expenses

17,000

17,100

Net operating income

25,000

7,900

Interest expense

900

900

Net income before taxes

24.100

7.000

Income taxes

9.640

2,800

Net income

14.460

4,200

Dividends to common stockholders

250

250

Net income added to retained earnings

14,210

3,950

Beginning retained earnings

35,190

31,240

Ending retained earnings

$49,400

$35,190

Required:

Compute the following financial data and ratios for this year

1. Working capital.

2. Current ratio. (Round your answer to 2 decimal places.)

3. Acid - test ratio. (Round your answer to 2 decimal places.)

Problem 3:

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 600,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.50. The market value of the company's common stock at the end of the year was $26. All of the company's sales are on account.

Weller Corporation
Comparative Balance Sheet
(dollars in thousands)

Assets

Current assets:

ThIs Year

Last Year

Cash

$ 1,150

$   1,350

Accounts receivable, net

10.000

7,100

Inventory

12,200

11,900

Prepaid expenses

670

520

Total current assets

24,020

20,870

Property and equipment:

 

 

Land

9,900

9,900

Buildings and equipment, net

49,586

40,274

Total property and equipment

59,486

50,174

Total assets

$83,506

$71,044

Liabilities and Stockholders' Equity

 

 

Current liabilities:

 

 

Accounts payable

$19,600

$17,700

Accrued liabilities

960

880

Notes payable, shod term

260

260

Total current liabilities

20,820

18,840

Long-term liabilities:

 

 

Bonds payable

9,600

9,600

Total liabilities

30,420

28,440

Stockholders' equity:

 

 

Common stock

600

600

Additional paid-in capital

4,000

4,000

Total paid-in capital

4.600

4,600

Retained earnings

48,486

38,004

Total stockholders' equity

53,086

42,604

Total liabilities and stockholders' equity

$83,506

$ 71,044

 

 

 

Weller Corporation Comparative Income Statement Reconciliation and

(dollars In thousands)

 

This Year

Last Year

 

Sales

$74,385

$64,000

 

Cost of goods sold

37,355

34,000

 

Gross margin

37,030

30.000

 

Selling and administrative expenses:

 

 

 

Selling expenses

10,900

10,500

 

Administrative expenses

7,200

6,600

 

 

 

   

Total selling and administrative expenses

18,100

17,100

 

Net operating income

18,930

12,900

 

Interest expense

960

960

Net income before taxes

17,970

11,940

Income taxes

7,188

4,776

Net Income

10,782

7,164

Dividends to common stockholders

300

300

Net income added to retained earnings

10,482

6,864

Beginning retained earnings

38,004

31,140

Ending retained earnings

$48,486

$38,004

Required:

Compute the following financial data for this year.

1. Accounts receivable turnover. (Assume that all sales are on account.) (Round your answer to 2 decimal places.)

2. Average collection period. (Use 365 days In a year. Round your Intermediate calculations and final answer to 2 decimal places.)

3. Inventory turnover. (Round your answer to 2 decimal places.)

4. Average sale period. (Use 365 days In a year. Round your Intermediate calculations and final answer to 2 decimal places.)

5. Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.)

6. Total asset turnover. (Round your answer to 2 decimal places.)

Problem 4:

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not Issue any new common stock during the year. A total of 700,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $.75. The market value of the company's common stock at the end of the year was $28. All of the company's sales are on account.

Weller Corporation
Comparative Balance Sheet
(dollars In thousands)

Assets

Current assets:

This Year

Last Year

Cash

$ 1,220

$ 1,280

Accounts receivable, not

10,300

8,100

Inventory

13,000

12,100

Prepaid expenses

790

620

Total current assets

25,310

22.100

Property and equipment:

 

 

Land

10,200

10,200

Buildings and equipment, net

41,718

41,209

Total property and equipment

51,918

51,409

Total assets

$77,228

$73,509

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities:

 

 

Accounts payable

$19.000

$ 18,600

Accrued liabilities

1,030

800

Notes payable, short term

0

250

Total current liabilities

20,030

19,650

Long-term liabilities:

 

 

Bonds payable

9,600

9,600

Total liabilities

29,630

29,250

Stockholders' equity:

 

 

Common stock

2,000

2,000

Additional paid•in capital

4,000

4,000

Total paid-in capital

6.000

6,000

Retained earnings

41,598

38,259

Total stockholders' equity

47,598

44,259

Total liabilities and stockholders' equity

$77,228

$73,509

Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)


This Year Last Year

Sales

$67,000

$64,000

Cost of goods sold

41,000

33,000

Gross margin

26,000

31,000

Selling and administrative expenses:

 

 

Selling expenses

11,500

10,700

Administrative expenses

7,100

6,600

Total selling and administrative expenses

18,600

17,300

Net operating income

7,400

13,700

Interest expense

960

960

Net income before taxes

6.440

12,740

Income taxes

2.576

5,096

Net Income

3,864

7,644

Dividends to common stockholders

525

525

Net income added to retained earnings

3,339

7,119

Beginning retained earnings

38,259

31,140

Ending retained earnings

$41,598

$38,259

Required:

 

 

Compute the following financial ratios for this year:

 

 

Required:
Compute the following financial ratios for this year:

1. Times Interest earned ratio. (Round your answer to 1 decimal place.)
2. Debt-to-equity ratio. (Round your answer to 2 decimal places.)
3. Equity multiplier. (Round your answer to 2 decimal places.)

Problem 5:

Comparative financial statements for Weller Corporation, a merchandising company. for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 830,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%. and the dividend per share of common stock was $0.40. The market value of the company's common stock at the end of the year was $19.50. All of the company's sales are on account.

Weller Corporation
Comparative Balance Sheet
(dollars in thousands)

Assets

Current assets:

This Year

Last Year

Cash

$ 5,078

$ 5,190

Accounts receivable, net

12,600

9,250

Inventory

9,850

8,320

Prepaid expenses

1,830

2,160

Total current assets

29,358

24,920

Property and equipment:

 

 

Land

6,300

6,300

Buildings and equipment, net

19,500

19,300

Total property and equipment

25,800

25,600

Total assets

$55,158

$50,520

Liabilities and Stockholders' Equity

 

 

Current liabilities:

 

 

Accounts payable

$ 9,800

$ 8.450

Accrued liabilities

660

850

Notes payable, short term

330

330

Total current liabilities

10,790

9,630

Long-term liabilities:

 

 

Bonds payable

8,750

8,750

Total liabilities

19,540

18,380

Stockholders' equity:

 

 

Common stock

830

830

Additional paid-in capital

4,350

4,350

Total pald-in capital

5,180

5,180

Retained earnings

30,438

26,960

Total stockholders' equity

35,618

32,140

Total liabilities and stockholders' equity

$55,158

$50,520

Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)

 

This Year

Last Year

Sales

$82,000

$77,000

Cost of goods sold

53,500

49,500

Gross margin

28.500

27.500

Selling and administrative expenses:

 

 

Selling expenses

8,800

8,300

Administrative expenses

12,300

11.300

Total selling and administrative expenses

21,100

19,600

Net operating income

7,400

7,900

Interest expense

1.050

1,050

Net income before taxes

6,350

6,850

Income taxes

2.540

2,740

Net income

3,810

4,110

Dividends to common stockholders

332

332

Net income added to retained earnings

3,478

3,778

Beginning retained earnings

26,960

23,182

Ending retained earnings

$30,438

$26,960


Required:
Compute the following financial data for this year:
1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
3. Retum on total assets. (Round your percentage answer to 1 decimal place (I.e., 0.1234 should be entered as 12.3).)
4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Problem 6:

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 850.000 shares of common stock were outstanding. The interest rate on the bond payable was 12%. the income lax rate was 40%, and the dividend per share of common stock was $0.40. The market value of the company's common stock at the end of the year was $20.50. All of the company's sales are on account.
Weller Corporation
Comparative Balance Sheet
(dollars in thousands)

Assets

Current assets:

This Year

Last Year

Cash

$ 1,810

$         710

Accounts receivable, net

12,800

10,000

Inventory

9,950

8,400

Prepaid expenses

1,850

2,200

Total current assets

26,410

21,310

Property and equipment:

 

 

Land

6,500

6,500

Buildings and equipment, net

19,700

19,500

Total property and equipment

26.200

26,000

Total assets

$52,610

$47,310

Liabilities and Stockholders' Equity

 

 

Current liabilities:

 

 

Accounts payable

$10,000

$ 8,550

Accrued liabilities

700

950

Notes payable, short term

350

350

Total current liabilities

11,050

9.850

Long-term liabilities:

 

 

Bonds payable

5,000

5,000

Total liabilities

16,050

14,850

Stockholders' equity:

 

 

Common stock

850

850

Additional paid-in capital

4,450

4,450

Total paid-in capital

5,300

5,300

Retained earnings

31,260

27,160

Total stockholders' equity

36.560

32,460

Total liabilities and stockholders' equity

$52,610

$47,310

 

 

 

Weiler Corporation Comparative Income Statement Reconciliation and

(dollars In thousands)

 

This Year

Last Year

 

Sales

$84,000

$79,000

 

Cost of goods sold

54,500

50,500

 

Gross margin

29,500

28,503

 

Selling and administrative expenses:

 

 

 

Selling expenses

9,000

8,500

 

Administrative expenses

12,500

11,500

 

Total selling and administrative expenses

21,500

20,000

 

Net operating income

8,000

8,500

 

Interest expense

600

600

 

Net income before taxes

7.400

7.900

 

Income taxes

2,960

3,160

 

Net income

4,440

4,740

 

Dividends to common stockholders

340

340

 

Net income added to retained earnings

4,100

4,400

 

Beginning retained earnings

27,160

22,760

 

Ending retained earnings

$31.280

$27,160

 

Required:
Compute the following financial data for this year.
1. Earnings per share. (Round your answer to 2 decimal places.)
2. Pdce-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal niaces.)
3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)
4. Dividend yield ratio. (Round your intermediate calculations and final answer to 2 decimal places.)
5. Book value per share. (Round your answer to 2 decimal places.)

Problem 7:

Rotorua Products, Ltd., of New Zealand markets agricultural products for the burgeoning Asian consumer market. The company's current assets, current liabilities, and sales have been reported as follows over the last five years (Year 5 is the most recent year):

 

Year 1

Year 2

Year 3

Year 4

Year 5

Sales

$4,556,090

$4,866,830

$5,103,410

$5,434,060

$5,721,240

Cash

 

 

 

 

 

$       97,532

$      104,951

$      92,470

$      90.966

$      67,724

Accounts receivable, net

416.455

425.820

437,223

507,915

577,020

Inventory

806,723

869,850

834,585

897,619

898,997

Total current assets

$1,320,710

$1.400,621

$1,364,278

$1.496,500

$1,543,741

Current liabilities

$     314,974

$ 349,284

$ 337,560

$ 335,088

$ 396,570

Required:

1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year.
(Round your percentage answers to 1 decimal place (i.e.. 0.1234 should be entered as 12.3).)

Problem 8:

In the right-hand column below, certain financial ratios are listed. To the left of each ratio is a business transaction or event relating to the operating activities of Delta Company.

Business Transaction or Event                                                 Ratio

1.     Declared a cash dividend.                                                            Current ratio

2.     Sold inventory on account at cost.                                               Acid-test ratio

3.     Issued bonds with an interest rate of 8%. The company's return on

assets is 10%.                                                                                                            Return on equity

4.     Net Income decreased by 10% between last year and this year. Long-

term debt remained unchanged.                                                       Times interest earned

5.     Paid a previously declared cash dividend.                                    Current ratio

6.     The market price of the company's common stock dropped from

$24.50 to $20.00. The dividend paid per share remained unchanged. Dividend payout ratio

7.     Obsolete inventory totaling $100,000 was written off as a loss.     Inventory turnover ratio

8.     Sold inventory for cash at a profit.                                              Debt-to-equity ratio

9.     Changed customer credit terms from 2110, n/30 to 2/15. n/30 to

comply with a change in industry practice.                                    Accounts receivable turnover ratio

10.  Issued a stock dividend to common stockholders.                       Book value per share

11.  The market price of the company's common stock increased from

$24.50 to $30.00.                                                                                                       Book value per share

12.  Paid $40,000 on accounts payable.                                             Working capital

13.  Issued a stock dividend to common stockholders.                       Earnings per share

14.  Paid accounts payable.                                             Debt-to-equity ratio

15.  Purchased inventory on account.                                                 Acid-test ratio

16.  Wrote off an uncollectible account against the Allowance for Bad Debts.                                                                                                                         Current ratio

17.  The market price of the company's common stock Increased from

$24.50 to $30.00. Earnings per share remained unchanged.            Price-earnings ratio

18.  The market price of the company's common stock Increased from

$24.50 to $30.00. The dividend paid per share remained unchanged. Dividend yield ratio

Required:

Indicate the effect that each business transaction or event would have on the ratio listed opposite to it. State the effect in terms of increase, decrease, or no effect on the ratio involved. In all cases. assume that the current assets exceed the current liabilities both before and after the event or transaction.

Reference no: EM13859183

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