Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Chapter 14, Problem 14.5AP
(a)
To determine
Financial ratio: The financial ratios examine the performance of the company and used in comparing with other same business. It indicates the relationship of two or more parts of financial statements.
To determine: (1)
(b)
To determine
To indicate: Comparison of liquidity, profitability, and solvency of the two companies.
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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
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Net income $2,849 $12,731
Balance Sheet Data (End of Year)
Current assets $18,906 $47,585
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Rickey’s Retail has the following financial information for the most recent accounting period. Prepare an income statement.
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Common-Sized Income Statement
Revenue and expense data for the current calendar year for Sorenson Electronics Company and for the electronics industry are as follows. Sorenson Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.
SorensonElectronicsCompany
ElectronicsIndustryAverage
Sales
$1,940,000
100
%
Cost of goods sold
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Gross profit
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24
%
Selling expenses
$(329,800)
(9)
%
Administrative expenses
(116,400)
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Total operating expenses
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%
Operating income
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%
Other revenue and expense:
Other revenue
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$155,200
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%
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a. Prepare a common-sized income statement comparing the results of operations for Sorenson Electronics Company with the industry average. If…
Chapter 14 Solutions
Managerial Accounting: Tools for Business Decision Making
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