FUNDAMENTAL ACCT PRIN CONNECT ACCESS
FUNDAMENTAL ACCT PRIN CONNECT ACCESS
24th Edition
ISBN: 9781266494604
Author: Wild
Publisher: MCG
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Chapter 17, Problem 1APSA
To determine

Concept Introduction:

Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.

Requirement-1:

To Calculate:

Trend Percents for all components of both statements using 2013 as base year

Expert Solution
Check Mark

Answer to Problem 1APSA

Trend Percents for all components of both statements using 2013 as base year are as follows:

    HAROUN COMPANY
    Comparative Income Statement Trend %
    For the Years Ended December 31
    $ thousands 2019201820172016201520142013
    Sales Trend %182.5%161.2%147.6%136.2%127.8%119.6%100.0%
    Cost of Goods Sold Trend %212.6%176.1%153.9%136.9%128.3%121.2%100.0%
    Gross profit Trend %131.0%135.7%136.8%135.1%126.9%117.0%100.0%
    Operating expenses Trend %279.7%216.9%198.3%144.1%123.7%122.0%100.0%
    Net income Trend %52.7%92.9%104.5%130.4%128.6%114.3%100.0%
    HAROUN COMPANY
    Comparative Year End Balance Sheet Trend %
    $ thousands 2019201820172016201520142013
    Assets:
    Cash Trend %65.2%87.6%92.1%94.4%98.9%96.6%100.0%
    Accounts Receivable, net Trend %226.9%238.0%215.7%166.7%147.2%139.8%100.0%
    Merchandise Inventory Trend %298.9%221.8%195.8%167.8%152.2%131.7%100.0%
    Other Current assets Trend %400.0%355.6%155.6%377.8%311.1%311.1%100.0%
    Long term Investments Trend %0.0%0.0%0.0%100.0%100.0%100.0%100.0%
    Plant Assets, net Trend %278.6%277.8%241.7%130.2%134.9%118.6%100.0%
    Total Assets Trend %246.8%222.3%195.4%144.4%138.6%124.0%100.0%
    Liabilities and Equity:
    Current Liabilities Trend %432.6%369.5%254.6%324.1%193.6%185.1%100.0%
    Long term liabilities Trend %323.5%285.0%278.0%142.5%145.0%155.0%100.0%
    Common Stock Trend %153.8%153.8%153.8%130.8%130.8%100.0%100.0%
    Other Paid in capital Trend %166.7%166.7%166.7%113.3%113.3%100.0%100.0%
    Retained earnings Trend %213.2%179.2%137.7%124.5%109.4%91.2%100.0%
    Total Liabilities and equity Trend %246.8%222.3%195.4%144.4%138.6%124.0%100.0%

Explanation of Solution

Trend Percents for all components of both statements using 2013 as base year are calculated as follows:

    HAROUN COMPANY
    Comparative Income Statement Trend %
    For the Years Ended December 31
    $ thousands 2019201820172016201520142013
    Sales 169414961370126411861110928
    Sales Trend %182.5%161.2%147.6%136.2%127.8%119.6%100.0%
    Cost of Goods Sold 12461032902802752710586
    Cost of Goods Sold Trend %212.6%176.1%153.9%136.9%128.3%121.2%100.0%
    Gross profit 448464468462434400342
    Gross profit Trend %131.0%135.7%136.8%135.1%126.9%117.0%100.0%
    Operating expenses330256234170146144118
    Operating expenses Trend %279.7%216.9%198.3%144.1%123.7%122.0%100.0%
    Net income 118208234292288256224
    Net income Trend %52.7%92.9%104.5%130.4%128.6%114.3%100.0%
    HAROUN COMPANY
    Comparative Year End Balance Sheet Trend %
    $ thousands 2019201820172016201520142013
    Assets:
    Cash 58788284888689
    Cash Trend %65.2%87.6%92.1%94.4%98.9%96.6%100.0%
    Accounts Receivable, net490514466360318302216
    Accounts Receivable, net Trend %226.9%238.0%215.7%166.7%147.2%139.8%100.0%
    Merchandise Inventory 1838136412041032936810615
    Merchandise Inventory Trend %298.9%221.8%195.8%167.8%152.2%131.7%100.0%
    Other Current assets 3632143428289
    Other Current assets Trend %400.0%355.6%155.6%377.8%311.1%311.1%100.0%
    Long term Investments 000146146146146
    Long term Investments Trend %0.0%0.0%0.0%100.0%100.0%100.0%100.0%
    Plant Assets, net 202020141752944978860725
    Plant Assets, net Trend %278.6%277.8%241.7%130.2%134.9%118.6%100.0%
    Total Assets4442400235182600249422321800
    Total Assets Trend %246.8%222.3%195.4%144.4%138.6%124.0%100.0%
    Liabilities and Equity:
    Current Liabilities 12201042718914546522282
    Current Liabilities Trend %432.6%369.5%254.6%324.1%193.6%185.1%100.0%
    Long term liabilities 129411401112570580620400
    Long term liabilities Trend %323.5%285.0%278.0%142.5%145.0%155.0%100.0%
    Common Stock 100010001000850850650650
    Common Stock Trend %153.8%153.8%153.8%130.8%130.8%100.0%100.0%
    Other Paid in capital 250250250170170150150
    Other Paid in capital Trend %166.7%166.7%166.7%113.3%113.3%100.0%100.0%
    Retained earnings678570438396348290318
    Retained earnings Trend %213.2%179.2%137.7%124.5%109.4%91.2%100.0%
    Total Liabilities and equity 4442400235182600249422321800
    Total Liabilities and equity Trend %246.8%222.3%195.4%144.4%138.6%124.0%100.0%
To determine

Concept Introduction:

Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.

Requirement-2:

To Indicate:

  1. If sales grow steadily over this period
  2. If net income as grow over the past years
  3. If inventory increased over this period

Expert Solution
Check Mark

Answer to Problem 1APSA

  1. Sales grew steadily over this period
  2. Net income did not grow over the past years
  3. Inventory has increased over this period

Explanation of Solution

The explanation for each trend is shows as below:

    $ thousands 2019201820172016201520142013
    Sales Trend %182.5%161.2%147.6%136.2%127.8%119.6%100.0%
    $ thousands 2019201820172016201520142013
    Net income Trend %52.7%92.9%104.5%130.4%128.6%114.3%100.0%
    $ thousands 2019201820172016201520142013
    Merchandise Inventory Trend %298.9%221.8%195.8%167.8%152.2%131.7%100.0%

Hence,

  1. Sales grew steadily over this period
  2. Net income did not grow over the past years
  3. Inventory has increased over this period

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Chapter 17 Solutions

FUNDAMENTAL ACCT PRIN CONNECT ACCESS

Ch. 17 - What ratios would you compute to evaluate...Ch. 17 - Why would a company’s return on total assets be...Ch. 17 - 13. Where on the income statement does a company...Ch. 17 - Prob. 14DQCh. 17 - Prob. 15DQCh. 17 - Prob. 16DQCh. 17 - Prob. 17DQCh. 17 - Prob. 1QSCh. 17 - QS 17-2 Standard of comparison C2 Identify which...Ch. 17 - Prob. 3QSCh. 17 - Trend percents P1 Use the following information to...Ch. 17 - QS17-5 Common-size analysis P2 Refer to the...Ch. 17 - QS 17-6 Computing current ratio and acid-test...Ch. 17 - QS 17-7 Computing accounts receivable turnover and...Ch. 17 - QS 17-8 Computing inventory turnover and days'...Ch. 17 - QS17-9 Computing total asset turnover P3 Dundee...Ch. 17 - Prob. 10QSCh. 17 - Prob. 11QSCh. 17 - QS 17-12 Computing price-earnings ratio and...Ch. 17 - Prob. 13QSCh. 17 - Prob. 14QSCh. 17 - QS 17-15A Identifying unusual and/or infrequent...Ch. 17 - Exercise 17-1 Building blocks of analysis Match...Ch. 17 - Prob. 2ECh. 17 - Prob. 3ECh. 17 - Prob. 4ECh. 17 - Prob. 5ECh. 17 - Prob. 6ECh. 17 - Prob. 7ECh. 17 - Prob. 8ECh. 17 - Prob. 9ECh. 17 - Prob. 10ECh. 17 - Exercise 17-11 Analyzing profitability P3 Q Refer...Ch. 17 - Prob. 12ECh. 17 - Prob. 13ECh. 17 - Prob. 14ECh. 17 - Prob. 15ECh. 17 - Exercise 17-16 Interpreting financial ratios A1 P3...Ch. 17 - Prob. 17ECh. 17 - Prob. 18ECh. 17 - Problem 17-1A Calculating and analyzing trend...Ch. 17 - Problem 17-2A Ratios, common-size statements, and...Ch. 17 - Problem 17-3A Transactions, working capital, and...Ch. 17 - Problem 17-4A Calculating financial statement...Ch. 17 - Prob. 5APSACh. 17 - Prob. 6APSACh. 17 - Prob. 1BPSBCh. 17 - Prob. 2BPSBCh. 17 - Prob. 3BPSBCh. 17 - Prob. 4BPSBCh. 17 - Prob. 5BPSBCh. 17 - Prob. 6BPSBCh. 17 - SP 17 Use the following selected data from...Ch. 17 - Prob. 1AACh. 17 - Prob. 2AACh. 17 - Prob. 3AACh. 17 - BTN 17-1 Refer to Apple’s financial statements in...Ch. 17 - Prob. 2BTNCh. 17 - Prob. 3BTNCh. 17 - Prob. 4BTNCh. 17 - Prob. 5BTNCh. 17 - Prob. 6BTN
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