Vacuum Analytics Case

xlsx

School

Salve Regina University *

*We aren’t endorsed by this school

Course

ACC-101-06

Subject

Finance

Date

Apr 3, 2024

Type

xlsx

Pages

3

Report

Uploaded by MegaExploration11252

The Vacuum Company, Inc. The Vacuum Company was engaged in manufactuing and marketing various household items, such as vacuum vacuum cleaners and whirlpools. The Company's financial statements and selected ratios are on the following two tabs. Use these financial statements to answer the following questions: 1) Prepare a vertical analysis on the financial statements. (use the Balance Sheet and Income Statement Tabs) 2) Based on the results of question #1, what relationships appear to be out of alignment? 3) Is the relationship between sales and cost of goods sold linear? 4) Should the relationship between sales and cost of goods sold be linear? If so, why? If not, why not? 5) Can you identify the potential fraud? If yes, how did you determine that there was a potential fraud? If not, what other information would help determine if there is a potential fraud?
Practical Problem # 1 The Vacuum Company, Inc. Audited Audited Audited BALANCE SHEET (in thousands) 2 years prior 1 year prior current ASSETS Cash 63 0.15% 514 885 Accounts Receivable 14,402 33.34% 27,801 51,076 Inventories 9,762 22.60% 19,577 39,135 Other Current Assets 708 1.64% 1,449 3,015 Total Current Assets 24,935 57.72% 49,341 94,111 Fixed Assets 19,523 45.190% 19,736 27,884 Accum Depreciation (3,140) -7.268% (4,948) (6,336) Other Assets 1,884 4.361% 1,112 2,481 TOTAL ASSETS 43,202 100.000% 65,241 118,140 LIABILITIES & EQUITY Lines of Credit 2,707 6.3% 0 0 curr portion LT Debt 0 0.0% 900 1,250 Accounts Payable 7,344 17.0% 15,072 13,288 Accrued Liabilities 3,127 7.2% 5,468 4,710 Income Taxes Payable 1,554 3.6% 2,619 3,782 Total Current Liabilities 14,732 34.1% 24,059 23,030 Bonds Payable 14,800 34.3% 13,900 14,625 Bank Debt 0 0.0% 5,941 47,432 Deferred Income Taxes 685 1.6% 1,254 1,881 TOTAL LIABILITIES 30,217 69.9% 45,154 86,968 Common Stock 1 0.0% 1 1 Add'l paid in Capital 8,010 18.5% 8,018 8,023 Retained Earnings 5,210 12.1% 12,315 23,269 Currency Adjustments 0 0.0% 0 126 Treasury Stock (236) -0.5% (247) (247) TOTAL LIABILITIES & EQUITY 43,202 100.0% 65,241 118,140
Practical Problem # 1 The Vacuum Company, Inc. STATEMENTS OF INCOME (IN THOUSANDS) Audited Audited Audited 2 years prior 1 year prior current Net Sales $ 76,144 100.0% $ 128,234 $ 181,123 Costs of Goods Sold 46,213 60.7% 70,756 94,934 Gross Margin 29,931 39.3% 57,478 86,189 General Expenses 20,105 26.4% 42,600 64,285 Operating Income 9,826 12.9% 14,878 21,904 Interest Expense 1,930 2.5% 1,584 3,189 Income Taxes 3,807 5.0% 6,189 7,761 Net Income $ 4,089 5.4% $ 7,105 $ 10,954 Earnings per share $ 0.46 $ 0.78 $ 1.21 BALANCE SHEET RATIOS Current Ratio 1.693 2.051 4.086 Quick Ratio 0.982 1.177 2.256 Days Sales in AR 69.037 79.132 102.929 Asset Turnover 2.365 1.975 Day's Sales in Inventory 77.102 75.674 112.867 Debt/Equity Ratio 2.327 2.248 2.79 OPERATIONS RATIOS Receivables Turnover 5.287 4.613 3.546 Inventory Turnover 4.734 4.823 3.234 Times Interest Earned 2.119 4.485 3.435 COGS/Sales 60.69% 55.18% 52.41% Gross Margin % 39.31% 44.82% 47.59% Return on Equity 31.49% 35.37% 35.14%
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help