Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 17, Problem P17.27APGA
Using ratios to evaluate a stock investment
Learning Objective 4
1. 2018: e. 48.9%
Comparative financial statement data of Sanfield, Inc. follow:
SANFIELD, INC. | ||||
Comparative Income Statement | ||||
Year Ended December 31, 2018 and 2017 | ||||
2018 | 2017 | |||
Net Sales Revenue | $462,000 | $430,000 | ||
Cost of Goods Sold | 236,000 | 213,000 | ||
Gross Profit | 226,000 | 217,000 | ||
Operating Expenses | 135,000 | 133,000 | ||
Income From Operations | 91,000 | 84,000 | ||
Interest Expenses | 8,000 | 12,000 | ||
Income Before Income Tax | 83,000 | 72,000 | ||
Income Tax Expense | 18,000 | 22,000 | ||
Net Income | $65,000 | $50,000 |
SANFIELD, INC. | ||||||
Comparitive Income Statement | ||||||
Year Ended December 31, 2018 and 2017 | ||||||
2018 | 2017 | 2016* | ||||
Assets | ||||||
Current Assets: | ||||||
Cash | $99,000 | $97,000 | ||||
109,000 | 117,000 | $100,000 | ||||
Merchandise Inventory | 142,000 | 164,000 | $207,000 | |||
Prepaid Expenses | 15,000 | 5,000 | ||||
Total Current Assets | 365,000 | 383,000 | ||||
Property, Plant, and, Equipment, Net | 215,000 | 177,000 | ||||
Total Assets | $580,000 | $560,000 | $599,000 | |||
Liabilities | ||||||
Total Current Liabilities | $222,000 | $244,000 | ||||
Long-Term Liabilities | 113,000 | 92,000 | ||||
Total Liabilities | 335,000 | 336,000 | ||||
92,000 | 92,000 | |||||
Common Stockholders' Equity, no par | 153,000 | 132,000 | 85,000 | |||
Total Liabilities and Stockholders' Equity | $580,000 | $560,000 |
- Market price of Sanfield’s common stock: $51.48 at December 31, 2016, and $37.08 at December 31,2017.
- Common shares outstanding: 16,000 on December 31, 2018 and 15,000 on December 31, 2017 and 2016.
- All sales are on credit.
Requirements
1. Compute the following ratios for 2018 and 2017:
Current ratio - Cash ratio
- Times-interest-earned ratio
- Inventory turnover
- Gross profit percentage
- Debt to equity ratio
Rate of return on common stockholders' equity- Earnings per share of common stock
- Price/earnings ratio
2. Decide (a) whether Sanfield’s ability to pay debts and to sell inventory improved or deteriorated during 2018 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.
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Ratios Compared with Industry Averages
Because you own the common stock of Jacob Corporation, a paper manufacturer, you decide to analyze the firm's performance for the most recent year. The following data are taken from the firm's latest annual report:
Dec. 31, 2019 Dec. 31, 2018
$700,000
Quick assets
Inventory and prepaid expenses
Other assets
$552,000
372,000
312,000
4,788,000
4,200,000
Total Assets
$5,860,000 $5,064,000
Current liabilities
$724,000
$564,000
10% Bonds payable
1,440,000
1,440,000
8% Preferred stock, $100 par value
480,000
480,000
Common stock, $10 par value
2,700,000
2,160,000
Retained earnings
Total Liabilities and Stockholders' Equity
516,000
$5,860,000
420,000
$5,064,000
For 2019, net sales amount to $12,500,000, net income is $550,000, and preferred stock dividends paid are $50,000.
Required
Calculate the following ratios for 2019.
Round answers to two decimal places.
1. Return on sales
0
× %
2. Return on assets
0
x %
3. Return on common stockholders' equity
0
X…
GIVE THE COMPARATIVE INCOME STATEMENT VERTICAL ANALYSIS FROM THE FOLLOWING INCOME STATEMENT BELOW
JOLLIBEE INCOME STATEMENT
ITEM
2016
2017
2018
2019
2020
Sales/Revenue
113.81B
133.61B
161.17B
179.63B
129.31B
Sales Growth
-
17.40%
20.62%
11.45%
-28.01%
Cost of Goods Sold (COGS) incl. D&A
-
-
132.96B
150.88B
115.39B
COGS Growth
-
-
-
13.47%
-23.52%
COGS excluding D&A
89.27B
105.39B
121.08B
137.38B
100.82B
Depreciation & Amortization Expense
4B
4.75B
11.89B
13.5B
14.57B
Depreciation
3.93B
4.66B
11.73B
13.34B
14.32B
Amortization of Intangibles
68.99M
78.95M
151.82M
145.42M
245.23M
Gross Income
20.54B
23.48B
28.21B
28.75B
13.92B
Gross Income Growth
-
14.30%
20.12%
1.93%
-51.57%
Gross Profit Margin
-
-
-
-
10.77%
SG&A Expense
-
-
17.64B
20.21B
20.42B
SGA Growth
-
-
-
14.57%
1.02%…
GIVE THE COMPARATIVE INCOME STATEMENT HORIZONTAL AND VERTICAL ANALYSIS FROM THE FOLLOWING INCOME STATEMENT BELOW
JOLLIBEE INCOME STATEMENT
ITEM
2016
2017
2018
2019
2020
Sales/Revenue
113.81B
133.61B
161.17B
179.63B
129.31B
Sales Growth
-
17.40%
20.62%
11.45%
-28.01%
Cost of Goods Sold (COGS) incl. D&A
-
-
132.96B
150.88B
115.39B
COGS Growth
-
-
-
13.47%
-23.52%
COGS excluding D&A
89.27B
105.39B
121.08B
137.38B
100.82B
Depreciation & Amortization Expense
4B
4.75B
11.89B
13.5B
14.57B
Depreciation
3.93B
4.66B
11.73B
13.34B
14.32B
Amortization of Intangibles
68.99M
78.95M
151.82M
145.42M
245.23M
Gross Income
20.54B
23.48B
28.21B
28.75B
13.92B
Gross Income Growth
-
14.30%
20.12%
1.93%
-51.57%
Gross Profit Margin
-
-
-
-
10.77%
SG&A Expense
-
-
17.64B
20.21B
20.42B
SGA Growth
-
-
-…
Chapter 17 Solutions
Horngren's Accounting (12th Edition)
Ch. 17 - Prob. 1QCCh. 17 - Prob. 2QCCh. 17 - Prob. 3QCCh. 17 - Prob. 4QCCh. 17 - Prob. 5QCCh. 17 - Prob. 6QCCh. 17 - Prob. 7QCCh. 17 - Prob. 8QCCh. 17 - Prob. 9QCCh. 17 - Prob. 10QC
Ch. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - What is benchmarking, and what are the two main...Ch. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQCh. 17 - Prob. 11RQCh. 17 - Prob. 12RQCh. 17 - Prob. 13RQCh. 17 - Prob. S17.1SECh. 17 - Prob. S17.2SECh. 17 - Prob. S17.3SECh. 17 - Prob. S17.4SECh. 17 - Prob. S17.5SECh. 17 - Prob. S17.6SECh. 17 - Computing inventory, gross profit, and receivables...Ch. 17 - Prob. S17.8SECh. 17 - Measuring profitability Learning Objective 4...Ch. 17 - Prob. S17.10SECh. 17 - Prob. S17.11SECh. 17 - Prob. S17.12SECh. 17 - Prob. E17.13ECh. 17 - Prob. E17.14ECh. 17 - Prob. E17.15ECh. 17 - Prob. E17.16ECh. 17 - Prob. E17.17ECh. 17 - Prob. E17.18ECh. 17 - Prob. E17.19ECh. 17 - Prob. E17.20ECh. 17 - Prob. E17.21ECh. 17 - Prob. E17.22ECh. 17 - Prob. P17.23APGACh. 17 - Prob. P17.24APGACh. 17 - Prob. P17.25APGACh. 17 - Prob. P17.26APGACh. 17 - Using ratios to evaluate a stock investment...Ch. 17 - Prob. P17.28APGACh. 17 - Prob. P17.29APGACh. 17 - Prob. P17.30BPGBCh. 17 - Prob. P17.31BPGBCh. 17 - Prob. P17.32BPGBCh. 17 - Prob. P17.33BPGBCh. 17 - Prob. P17.34BPGBCh. 17 - Prob. P17.35BPGBCh. 17 - Completing a comprehensive financial statement...Ch. 17 - Prob. P17.37CTCh. 17 - Prob. P17.38CPCh. 17 - Prob. 17.1DCCh. 17 - Prob. 17.1EICh. 17 - Financial Statement Case 17-1 Use Target...
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