Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
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Textbook Question
Chapter 3, Problem 21P
Jim Short’s Company makes clothing for schools. Sales in 20X1 were
b. In 20X2, sales increased to $5,740,000 and the assets for that year were as follows:
Once again, compute the four ratios.
c. Indicate if there is an improvement or decline in total asset turnover, and based on the other ratios, indicate why this development has taken place.
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COMPANY B
Balance Sheets
December 31, Year 2 and Year 1
Year 2
Year 1
Assets
Current assets:
Cash
Accounts receivable
Inventory
Investments
Long-term assets:
Land
$ 217,600
58,000
85,000
3,000
$ 110,000
82,000
70,000
1,000
380,000
690,000
(328,000)
$1,105,600
380,000
570,000
(168,000)
$1,045,000
Equipment
Less: Accumulated depreciation
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Interest payable
Income tax payable
Long-term liabilities:
Notes payable
Stockholders' equity:
Common stock
Retained earnings
$
89,000
$4
5,000
7,000
75,000
11,000
4,000
120,000
240,000
600,000
284,600
$1,105,600 $1,045,000
600,000
115,000
Total liabilities and stockholders' equity
Additional information for Year 2:
1. Net income is $169,600.
2. Sales on account are $1,183,000.
3. Cost of goods sold is $953,250.
Required:
1. Calculate the following profitability ratios for Year 2: (Round vour answers to 1 decimal place.)
Revenue and expense data for Young Technologies Inc. are as follows:
Year 2
Year 1
Sales
$500,000
$440,000
Cost of goods sold
325,000
242,000
Selling expense
70,000
79,200
Administrative expenses
75,000
70,400
Income tax expense
10,500
16,400
Required:
a. Prepare an income statement in comparative form, stating each item for both years as an amount and as a percent of sales. Round percentage amounts to nearest whole percent.
Young Technologies Inc.
Comparative Income Statement
For the Years Ended December 31, Year 2 and Year 1
Year 2 Amount
Year 2 Percent
Year 1 Amount
Year 1 Percent
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Revenue and expense data for Young Technologies Inc. are as follows:
Year 2
Year 1
Sales
$500,000
$440,000
Cost of goods sold
325,000
242,000
Selling expense
70,000
79,200
Administrative expenses
75,000
70,400
Income tax expense
10,500
16,400
Required:
a. Prepare an income statement in comparative form, stating each item for both years as an amount and as a percent of sales. Round percentage amounts to nearest whole percent.
Young Technologies Inc.
Comparative Income Statement
For the Years Ended December 31, Year 2 and Year 1
Year 2 Amount
Year 2 Percent
Year 1 Amount
Year 1 Percent
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Chapter 3 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
Ch. 3 - If we divide users of ratios into short-term...Ch. 3 - Explain how the Du Pont system of analysis breaks...Ch. 3 - If the accounts receivable turnover ratio is...Ch. 3 - Prob. 4DQCh. 3 - Is there any validity in rule-of-thumb ratios for...Ch. 3 - Why is trend analysis helpful in analyzing ratios?...Ch. 3 - Inflation can have significant effects on income...Ch. 3 - What effect will disinflation following a highly...Ch. 3 - Why might disinflation prove favorable to...Ch. 3 - Comparisons of income can be very difficult for...
Ch. 3 - Low Carb Diet Supplement Inc. has two divisions....Ch. 3 - Database Systems is considering expansion into a...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Dr. Zhivà€go Diagnostics Corp.’s income...Ch. 3 - The Haines Corp. shows the following financial...Ch. 3 - Easter Egg and Poultry Company has $2,000,000 in...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Baker Oats had an asset turnover of 1.6 times per...Ch. 3 - AllState Trucking Co. has the following ratios...Ch. 3 - Front Beam Lighting Company has the following...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Jerry Rice and Grain Stores has $4,780,000 in...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Jim Short’s Company makes clothing for schools....Ch. 3 - The balance sheet for Stud Clothiers is shown...Ch. 3 - The Lancaster Corporation’s income statement is...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - The Global Products Corporation has three...Ch. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - The following information is from Harrelson...Ch. 3 - Using the financial statements for the Snider...Ch. 3 - Given the financial statements for Jones...Ch. 3 - Prob. 2WE
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