FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781618533111
Author: DYCKMAN
Publisher: Cambridge Business Publishers
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Chapter 5, Problem 35E
a.
To determine
Prepare the common-size income statement for the year ended 2018 and 2017.
b.
To determine
Prepare the income statement
c.
To determine
Identify the factors that ultimately determine the accuracy of the
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A condensed income statement for Weber Associates and a partially completed vertical analysis follow.
Required:
1. Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year, Cost of
Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571).
2. Does Cost of Goods Sold, as a percentage of Net Revenues, represent better or worse performance in 2019 as compared to 2018?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year,
Cost of Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571). (Decreases should be indicated by a
minus sign. Round your answers to the nearest whole percent.)
Net Revenues
Cost of Goods Sold
Research and Development Expense
Sales and Marketing Expense
General and Administrative Expense
Income from Operations
Other…
6. The following is the adjusted trial balance data for Nino's Pizzenia as of December 31,
2019.
NINO'S PIZZERIA
Adjusted Trlal Balance
Year Ended December 31,2019
Debit
Credit
S 775,984
45,688
200,460
135,624
Cash
Accounts Receivable
Buildings
Merchandise Inventory
Accounts Payable
Common Stock
Sales
Interest Revenue
Rent Revenue
Sales Salaries Expense
office Supplies Expense
Sales Discounts
Interest Expense
Sales Returns and Allowances,
Cost of goods sold
Rent Expense
Depreciation Expense: Office Equipment
Insurance Expense
Advertising Expense
Totals
$437,880
410,542
555,696
84,652
86,900
24,500
6,270
102,890
4,577
105.854
122,853
20.000
10.555
2,780
17:635
$1,575,670
$1,575,670
calculate the table below based on the income statement and balance sheet attached
Ratio Anaylsis
2021 est
2020
2019
Industry Average
Profitability Ratios
Profit Margin on Sales (%)
8
Earning Power (%)
17.2
Return on Total Assets (%)
12
Return on Common Equity (%)
25
Market Value Ratios Price/Earnings Ratio
Price/Earnings Ratio (times)
12.5
Price/Cash Flow Ratio (times)
6.8
Market /Book Value Ratio (times)
1.7
Chapter 5 Solutions
FINANCIAL ACCOUNTING
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How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License