Use Apple’s financial statements in Appendix A to answer the following.
- Using fiscal 2015 as the base year, compute trend percents for fiscal years 2015, 2016, and 2017 for net sales, cost of sales, operating income, other income (expense) net, provision for income taxes, and net income. Round percents to one decimal.
- Compute common-sizepercents for fiscal years 2016 and 2017 for the following categories of assets: (a) total current assets; (b) property, plant and equipment, net; and (c)
goodwill plus acquired intangible assets, net. Round percents to one decimal. - Using current assets as a percent of total assets to measure liquidity, did Apple’s asset makeup become more liquid or less liquid in 2017?
Trend percents:
A horizontal form of analysis which reveals a pattern in data across successive period is known as trend percents. In this analysis items are expressed as a percentage of a base year and items are taken line by line.
Common size percents:
Common size percent is the percent of each account expressed as a percentage of the sales value.
1.
To compute: Year 2013, 2014 and 2015 trend percents for net sales, cost of sales, operating income, other income(expense)net, provision for income taxes and net income of A Company by using 2013 as base year.
Explanation of Solution
To compute trend percents, base amount is required firstly. Base amount is an amount which is predecided.
Formula to calculate trend percent is:
Trend percents are shown below:
Particulars | 2015(%) | 2014(%) | 2013(%) |
Net sales | 136.75 | 106.95 | 100 |
Cost of sales | 131.41 | 105.30 | 100 |
Operating income | 145.37 | 107.15 | 100 |
Other income (expense) net | 111.16 | 84.78 | 100 |
Provision for income taxes | 145.76 | 106.52 | 100 |
Net income | 144.16 | 106.68 | 100 |
Working Notes:
Trend percents for Sales:
Trend percents for Cost of sales:
Trend percents for operating income:
Trend percents for other income (expense) net:
Trend percents for provision for income tax:
Trend percents for net income:
Thus, Except other income (expenses). All other items show increased percents in every year.
2.
To compute: Common size percent of (a) total current assets (b) property, plant and equipment, net and (c) goodwill plus acquired tangible assets, net for A Company for the year 2014 and 2015.
Explanation of Solution
Formula to calculate common size percent is:
Common size percents are shown below:
Particulars | 2015(%) | 2014(%) |
(a) Total current assets | 30.77 | 29.56 |
(b) Property, plant and equipment, net | 7.74 | 8.9 |
(c) Goodwill plus acquired intangible assets, net | 3.10 | 3.78 |
Working notes:
(a) Common size percents of total current assets:
(b) Common size percents of property, plant and equipment, net:
(c) Common size percents of goodwill plus acquired intangible assets, net:
3.
To explain: Changes across the year for the income statement trends computed in part 1 and the balance sheet percents computed in part 2.
Explanation of Solution
- Trend percents of income statement items represent an increased trend. Such as net sales trend percent is 136.75 in the year 2015 and 106.95 in the 2014 same has been increases with 29.8 (136.75-106.95).
- Only other income is reduced in 2014, all other income statement trends show increased numbers.
- Common size percent of balance sheet items shows increase in the current assets of the company. For example total current assets of the company have been increased to 30.77% in 2015 year from 29.56% in 2014.
- Other assets marginaly reduced in 2015 as a percentage of total assets.
Thus, A Company works quite efficiently.
Want to see more full solutions like this?
Chapter 13 Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
- 1. Compute the following ratios for the comparative periods (2018 and 2019). The company used 365 days in its computation for some of the ratios. Show your solution. d. Accounts Receivable Turnover Ratio e. Average Collection Period f. Inventory Turnover Ratio g. Average Days in Inventory h. Number of days in Operating Cycle i. Debt to Total Assets Ratio j. Debt to Equity Ratio k. Times Interest Earned Ratio l. Gross Profit Ratio m. Profit Margin Ratio n. Return on Assets o. Return on Equity p. Assets Turnover Ratioarrow_forwardlonic Exploration Company reported these figures for 2018 and 2017: E (Click the icon to view the figures.) Compute the rate of return on total assets for 2018. (Round to two decimals.) Select the formula, then enter the amounts to compute the rate of return on total assets for 2018. (Enter the rate of return as a percent rounded to two decimal places, X.XX%.) Rate of return on total assets %3D Data Table S: Income Statement-partial: 2018 2017 Interest Expense $ 17,800,000 $ 14,500,000 Net Income 18,400,000 14,600,000 Balance Sheet-partial: Dec. 31, 2018 Dec. 31, 2017 Total Assets $ 322,000,000 $ 320,000,000 Print Donearrow_forwardAfter reviewing the information, calculate the following ratios for Nestlé for 2021:1) Inventory turnover2) Profit margin3) Return on assets4) Free cash flowRound all answers to two decimal places.arrow_forward
- 6. The following is the adjusted trial balance data for Nino's Pizzenia as of December 31, 2019. NINO'S PIZZERIA Adjusted Trlal Balance Year Ended December 31,2019 Debit Credit S 775,984 45,688 200,460 135,624 Cash Accounts Receivable Buildings Merchandise Inventory Accounts Payable Common Stock Sales Interest Revenue Rent Revenue Sales Salaries Expense office Supplies Expense Sales Discounts Interest Expense Sales Returns and Allowances, Cost of goods sold Rent Expense Depreciation Expense: Office Equipment Insurance Expense Advertising Expense Totals $437,880 410,542 555,696 84,652 86,900 24,500 6,270 102,890 4,577 105.854 122,853 20.000 10.555 2,780 17:635 $1,575,670 $1,575,670arrow_forwardTo calculate a year-to-year percentage change in any financial statement line item such as sales, you determine the current-year amount and prior-year amount and divide the difference by: A) Total assets B) Net income C) The current year’s amount D) The prior years amountarrow_forwardThe following select account data is taken from the records of Reese Industries for 2019. A. Use the data provided to compute net sales for 2019.B. Prepare a simple income statement for the year ended December 31, 2019.C. Compute the gross margin for 2019.D. Prepare a multi-step income statement for the year ended December 31, 2019.arrow_forward
- Following are the financial statements of ABC Ltd. for 2010 Requirement: Calculate and interpret following ratios: 1. Current ratio 2. Liquid ratio 3. Receivables turnover ratio and collection period 4. Inventory turnover and holding period 5. Fixed assets turnoverarrow_forwardSolve and perform the different financial ratios using the financial statements of XYZ Company for the year 2021. 1. Current Ratio 2. Quick Ratio 3. Receivables Turnover 4. Inventory Turnover 5. Debt Ratio 6. Equity Ratio 7. Times Interest Earned 8. Gross Profit Margin 9. Operating Profit Margin 10. Net Profit Marginarrow_forwardRequired 1. Compute each year’s current ratio. Round ratios to one decimal. 2. Express the income statement data in common-size percents. Round percents to two decimals. 3. Express the balance sheet data in trend percents with 2017 as the base year. Round percents to two decimals. Analysis Component 4. Comment on any significant relations revealed by the ratios and percents computed.arrow_forward
- Compare the following for the year 2019, 2020 and 2021 for the Acer Company: analysis in words incl. total assets, short term assets, long-term assets, non-current assets, return on assets, equity, equity growth or decrease over the years, Price-Earning ratio, liabilities.arrow_forward1. Do the current Ration part 2. Please do a common-size comparative income statements for years Ended December 31,2022, 2019, and 2018 3. Do a balance sheet data in Trend Percents for December 31,2020, 2019, and 2018 Thank youarrow_forwardNeed to calculate for the "YEAR" 2013. quick ratio, fixed assets turnover ratio, inventory turnoverarrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub