Concept explainers
a.
To prepare: The income statement and determine if it is profitable.
Introduction: Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to compute the net income for a particular period.
b.
To compute: The breakeven point, DOL, DFL, DCL for each company and industry average.
Introduction: Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to compute the net income for a particular period.
c.
To perform: Analysis on each company along with the average industry standards.
Introduction: Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to compute the net income for a particular period.
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EBK FINANCIAL ANALYSIS WITH MICROSOFT E
- Your Task… Using your assigned financial statements calculate the required ratios below Indicate if the change from year to year is favorable or unfavorable. All values should be accurate to at least two decimal places. The expectation is to submit a professional report free of grammar and spelling errors and easy to read. Think of this as a menu you would be handing to a customer. All calculations are to be represented. Analysis of Profitability Gross Profit Ratio Operating Profit Ratio Net Profit Ratio Sales to Total Assets Ratio Return on Total Assets Return on Equity Earnings Per Sharearrow_forwarda. Present a cost-profit-volume analysis that shows the effect of adding the $8,500 annual premium to the company's fixed costs by showing current and revised CVP Income Statements. Include a column to the right of each income statement where each line item is expressed as a percentage of sales (called a common size income statement). b. Visualize the changes to net income in a chart. c. Advise the company using your quantitative support and qualitative. reasoning as to whether the company should purchase the insurance. A-Float Pools Company Income Statement (Pools Maintenance Div.) For the Year Ended December 31, 2022 In Sales (2,000 clients) Cost of Services Gross profit Operating expenses Selling Administrative Net Income $165,000 $225,000 $1,100,000 627,000 $473,000 $390,000 $83.000arrow_forwardPlease take a look below at the two companies' financial ratios. Use the material your learned in the chapter to try and identify the industries these two companies operate in. You are going to be graded on the quality of your analysis and arguments (e.g. this ratio indicates that... and that ratio indicates the other,... and taken together these ratios indicate that.... (and so forth)) : Company A Company B P/E Ratio: 30 Price/Sales: 6 Price/Book Value of Equity: 7.5 Profit Margin: 20% Operating Margin: 25% Return on Assets (ROA): 6% Return On Equity (ROE): 25% Current Ratio: 3 P/E Ratio: 17 Price/Sales: 0.6 Price/Book Value of Equity: 3 Profit Margin: 3% Operating Margin: 5% Return on Assets (ROA): 7% Return On Equity (ROE): 15% Current Ratio: 1arrow_forward
- A Comparison of Firm Performance 1 2 2013 Financials 3 Net operating revenues 4 Cost of goods sold 5 Gross profit 6 Selling, general, and administrative expense 7 Other costs 8 Operating income 9 Interest expense 10 Other income (loss) - net 11 Income before income taxes 12 Income taxes 13 Net income 14 Assets 15 Cash and cash equivalents 16 Net receivables 17 Inventories 18 Prepaid expenses and other 19 Total current assets 20 Property, plant and equipment 21 Goodwill 22 Other assets 23 Total assets 24 Liabilities and Stockholder Equity 25 Accounts payable 26 Short-term debt 27 Total current liability 28 Long-term debt 29 Other liabilities 30 Total liabilities 31 Stockholder equity 32 B Walmart 469,162 352,488 116,674 88,873 27,801 2,251 187 25,737 7,981 17,756 7,781 6,768 43,803 1,588 59,940 116,681 20,497 5,987 203,105 59,099 12,719 71,818 41,417 113,235 89,870 C Macy's 27,931 16,725 11,206 8,440 88 2,678 388 (134) 2,156 767 1,389 1,836 371 5,308 361 7,876 8,196 3,743 1,176 20,991…arrow_forwardConstruct an income proforma operating statement using the following information. It should show the following on a whole dollar basis: PGI (rental income and other income itemized), vacancy & collection loss, EGI, operating expenses, OER, and NOI. 64,000 SF warehouse Market rent is $9.25/SF with industrial gross terms. Industrial gross in this market means the landlord pays for taxes, insurance, and common area maintenance (CAM). Market vacancy in this market is 3.5%. Market collection loss is 0.5%. Operating expenses include: insurance: $0.10/SF Real estate taxes: $2.75/SF CAM: $0.20/SF Management fee: 3% of EGI Replacement reserves: Based on a sinking fund factor for $195,000 in 7 years in an interest-bearing account with a rate of 4% (annual compounding).arrow_forward- Please refer to the following Income Statement and Balance Sheet (see attached picture): Prepare a vertical analysis for both the income statement and balance sheet. Write a paragraph comparing the company’s performance with the industry average. Compute the following ratios and comment on what the results mean when evaluating the company: Current ratio Gross profit percentage ratio Debt ratio Profit margin ratioarrow_forward
- Carson Electronics’ management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheet and income statements for the two firms are as follows: Calculate the following ratios for both Carson and BGT: a) Current ratio: b) Times interest earned: c) Inventory turnover:arrow_forwardBelow are amounts found in the income statements of three companies.Required: 1. For each company, calculate (a) gross profit, (b) operating income, (c) income before income taxes, and (d) net income. 2. For each company, calculate the gross profit ratio and indicate which company has the most favorable ratio.arrow_forwardRevenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill’s data are expressed in dollars. The electronics industry averages are expressed in percentages. Please see the attachment for details: a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. Round to the nearest whole percentage.b. As far as the data permit, comment on significant relationships revealed by the comparisons.arrow_forward
- The net profit margin tells how much profit a company makes for every dollar it generates in revenue. If N is the net income (income after taxes have been paid) and R is the total revenue, then the net profit margin M is M (N,R) =N/R. This company pays a tax rate of 35% on its income. A) let I represent the company’s income before taxes. Express N as a function of I. (n is the part of I left after taxes) B) express M in terms of I and Rarrow_forwardThe net profit margin tells how much profit a company makes for every dollar it generates in revenue. If N is the net income (the income after taxes have been paid) and R is the total revenue, then the net profit margin M is given by N M(N, R) R = A certain company pays a tax rate of 20% on its income. (a) Use I for the income before taxes, and express the net income N in terms of I. (Be careful: N is the part of I left after taxes-not the part you pay in taxes.) N = (b) Use a formula to express the net profit margin in terms of the variables I and R. M =arrow_forwardWith the information provided in the image: Prepare a multi-step income statement. Calculate the company's return on sales ratio.arrow_forward
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