Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 1PB
1.
To determine
Prepare horizontal analysis of the comparative income statement of Company M for the two-year period, using 2015 as the base year.
2.
To determine
Comment significant relationships revealed by the horizontal analysis.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
For 2014, Lindell Company reported its most significant decline in net income in years. At the end of the year, H. Finn, the president, is presented with the following condensed comparative income statement:
Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2013 as the base year. Round to one decimal place.2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in(1).
For 20Y2, Macklin Inc. reported a significant increase in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement:
Please see the attachment for details:
Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place.2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1).
Access the February 21, 2017, filing of the December 31, 2016, 10-K report of The Hershey Company (ticker: HSY) at SEC.gov and complete the following requirements. Required Compute or identify the following profitability ratios of Hershey for its years ending December 31, 2016, and December 31, 2015. Interpret its profitability using the results obtained for these two years. 1. Profit margin ratio (round the percent to one decimal). 2. Gross profit ratio (round the percent to one decimal). 3. Return on total assets (round the percent to one decimal). (Total assets at year-end 2014 were $5,622,870 in thousands.) 4. Return on common stockholders’ equity (round the percent to one decimal). (Total shareholders’ equity at year-end 2014 was $1,519,530 in thousands.) 5. Basic net income per common share (round to the nearest cent).
Chapter 17 Solutions
Financial Accounting
Ch. 17 - Prob. 1DQCh. 17 - What is the advantage of using comparative...Ch. 17 - Prob. 3DQCh. 17 - How would the current and quick ratios of a...Ch. 17 - Prob. 5DQCh. 17 - What do the following data, taken from a...Ch. 17 - a. How does the rate earned on total assets differ...Ch. 17 - Kroger, a grocery store, recently had a...Ch. 17 - Prob. 9DQCh. 17 - Prob. 10DQ
Ch. 17 - Prob. 1PEACh. 17 - Prob. 1PEBCh. 17 - Prob. 2PEACh. 17 - Vertical analysis Income statement information for...Ch. 17 - Prob. 3PEACh. 17 - Prob. 3PEBCh. 17 - Prob. 4PEACh. 17 - Prob. 4PEBCh. 17 - Prob. 5PEACh. 17 - Inventory analysis A company reports the...Ch. 17 - Prob. 6PEACh. 17 - Prob. 6PEBCh. 17 - Times interest earned A company reports the...Ch. 17 - Times interest earned A company reports the...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Prob. 9PEACh. 17 - Prob. 9PEBCh. 17 - Common stockholders' profitability analysis A...Ch. 17 - Common stockholders' profitability analysis A...Ch. 17 - Earnings per share and price-earnings ratio A...Ch. 17 - Earnings per share and price-earnings ratio A...Ch. 17 - Revenue and expense data for Gresham Inc. for two...Ch. 17 - Prob. 2ECh. 17 - Common-sized income statement Revenue and expense...Ch. 17 - Prob. 4ECh. 17 - Prob. 5ECh. 17 - The following data were taken from the balance...Ch. 17 - Prob. 7ECh. 17 - The bond indenture for the 10-year, 9% debenture...Ch. 17 - The following data are taken from the financial...Ch. 17 - Prob. 10ECh. 17 - The following data were extracted from the income...Ch. 17 - Prob. 12ECh. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Hasbro and Mattel, Inc., are the two largest toy...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Three major segments of the transportation...Ch. 17 - Prob. 17ECh. 17 - Profitability ratios Ralph Lauren Corporation...Ch. 17 - The following data were taken from the financial...Ch. 17 - The balance sheet for Garcon Inc. at the end of...Ch. 17 - Earnings per share, price-earnings ratio, dividend...Ch. 17 - The table that follows shows the stock price,...Ch. 17 - Earnings per share, discontinued operations The...Ch. 17 - Prob. 24ECh. 17 - Prob. 25ECh. 17 - Unusual items Explain whether Colston Company...Ch. 17 - Prob. 1PACh. 17 - For 2016, Indigo Company initiated a sales...Ch. 17 - Effect of transactions on current position...Ch. 17 - The comparative financial statements of Bettancort...Ch. 17 - Addai Company has provided the following...Ch. 17 - Prob. 1PBCh. 17 - Prob. 2PBCh. 17 - Effect of transactions on current position...Ch. 17 - Prob. 4PBCh. 17 - Crosby Company has provided the following...Ch. 17 - Financial Statement Analysis The financial...Ch. 17 - Prob. 1CPCh. 17 - Prob. 2CPCh. 17 - The condensed income statements through income...Ch. 17 - Prob. 4CPCh. 17 - Marriott International, Inc., and Hyatt Hotels...
Knowledge Booster
Similar questions
- Revenue and expense data for Gresham Inc. for two recent years are as follows: a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round to one decimal place. b. Comment on the significant changes disclosed by the comparative income statement.arrow_forwardThe following data (in millions) were taken from the financial statements of Costco Wholesale Corporation: a. For Costco, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. Comment on the results of your horizontal analysis in part (a). c. Based upon Exercise 2-23, compare and comment on the operating results of Target and Costco for the recent year.arrow_forwardIncome statement data for Winthrop Company for two recent years ended December 31 are as follows: Please see the attachment for details: a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place.b. What conclusions can be drawn from the horizontal analysis?arrow_forward
- Begin by calculating the gross profit for each year, then prepare a horizontal analysis of revenues and gross profitlong dash—both in dollar amounts and in percentageslong dash—for 20192019 and 20182018. (Enter amounts in millions as provided to you in the problem statement. Round the percentages to one decimal place, X.X%. Use a minus sign or parentheses to indicate a decrease.) McDonald Corp. Income Statement - (Partial) Years Ended December 31, 2019 and 2018 (Amounts in millions) 2019 2018 2017 Revenues $9,575 $9,300 $8,975 Cost of Goods Sold 6,250 6,000 5,890 Gross Profitarrow_forwardFor 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: Please see the attachment for details: Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place.2. To the extent the data permit, comment on the significant relationshipsrevealed by the horizontal analysis prepared in (1).arrow_forwardYou are given the financial statements of a company for over the 6-year periods (2016 –2021). Considering 2016 as the base year, compute the trend index for the following items:a. Revenue, cost of goods sold, total expenses and net earnings. Comment on the trends of each of the items.b. Total assets, total liabilities and shareholders’ equity. Comment on the trends of each of the items.c. Cash flow from operation, cash flow from investing, cash flow from financing and closing cash balances. Comment on the trends of each of the items.arrow_forward
- Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the formulae used for each ratio. Return on capital employed Gross profit percentage Net profit percentage Quick/Acid test ratio Receivables collection period Earnings per share Using the additional information given and the ratios you calculated in part (a), write a brief report on the financial performance of F. Raser. Indicate in your report what additional information might be useful to help interpret the ratios. © List two factors F. Raser should consider in deciding whether to raise finance by issuing loan notes rather than issuing sharesarrow_forwardPlease describe what is meant by “Times Interest Earned.” How is it calculated? Suppose you calculated this ratio for a company for two consecutive years and the results were the following: year 2018 – 24.0 year 2017 – 28.0 Please interpret the results. What conclusions can you draw?arrow_forwardLoomis, Inc. reported the following on the company’s income statement in two recent years: Please see the image for details: a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place.b. Is this ratio improving or declining?arrow_forward
- River Valley Production Inc. seeks to increase its market share and improve its results. The company takes as a starting point the current scenario and the results obtained in 2018 and 2019. Like other companies, River Valley uses financial ratios (ratios) as tools for analyzing the results obtained at the end of the period. Consider the data presented in the financial statements below and analyze the company's results based on the financial ratios.1. Use the financial statements to calculate the following financial ratios for the years 2018 and 2019: 1.1 Days Sales Outstanding (DSO)1.2 Assets Turnover Ratio1.3 Return on Assets (ROA)1.4 Return on Equity (ROE) Balance Sheet 2018 2019 Cash $63,000 $201,000 Accounts Receivable 199,000 305,000 Marketable Securities 81,000 42,000 Inventories 441,000 455,000 Prepaids 5,000 9,000 Total Current Assets 789,000 1,012,000 Property, Plant, and Equipment, net 858,000 858,000…arrow_forwardRiver Valley Production Inc. seeks to increase its market share and improve its results. The company takes as a starting point the current scenario and the results obtained in 2018 and 2019. Like other companies, River Valley uses financial ratios (ratios) as tools for analyzing the results obtained at the end of the period. Consider the data presented in the financial statements below and analyze the company's results based on the financial ratios.1. Use the financial statements to calculate the following financial ratios for the years 2018 and 2019:1.8 Return on Investment (ROI)1.9 Profit Margin1.10 Debt to Equity Ratio1.11 Price/Earning Ratio Balance Sheet 2018 2019 Cash $63,000 $201,000 Accounts Receivable 199,000 305,000 Marketable Securities 81,000 42,000 Inventories 441,000 455,000 Prepaids 5,000 9,000 Total Current Assets 789,000 1,012,000 Property, Plant, and Equipment, net 858,000 858,000…arrow_forwardCompute the following profitability ratios of the company for the most recent two years, show all values in the computations: 1.Asset Turnover 2.Profit margin ratio(Net Income/Net Sales) 3.Return on total assets (Net Income/Average Total Assets) 4.Return on stockholders’ equity 5.Basic Earnings per share (EPS) Based on the results above, what conclusions can you make about the company’s overall profitability and efficient use of assets?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning