Question
Brief Exercise 18-4

Using the following data from the comparative balance sheet of Goody Company.

December 31, 2015 December 31, 2014

Accounts receivable $405,324 $435,168

Inventory $778,122 $616,488

Total assets $2,502,000 $3,022,000

Illustrate vertical analysis. (Round percentages to 1 decimal place, e.g. 12.1%.)

December 31, 2015 December 31, 2014

Goody Company

Balance Sheets

Amount

Percentage

Amount

Percentage

Accounts receivable $405,324

% $435,168

%

Inventory $778,122

% $616,488

%

Total assets $2,502,000

% $3,022,000

%

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Brief Exercise 18-5

Net income was $499,160 in 2013, $452,610 in 2014, and $526,000 in 2015. What is the percentage of change from (a) 2013 to 2014 and (b) 2014 to 2015? Is the change an increase or a decrease? (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percentages to 0 decimal places, e.g. 12%.)

Increase or (Decrease)

Amount Percentage

(a) 2013?2014

%

(b) 2014?2015

%

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Brief Exercise 18-7

Horizontal analysis (trend analysis) percentages for Dody Company?s sales revenue, cost of goods sold, and expenses are shown below.

Horizontal Analysis 2015 2014 2013

Sales 94.9 106.7 100.0

Cost of goods sold 102.6 97.8 100.0

Expenses 107.5 97.4 100.0

Did Dody?s net income increase, decrease, or remain unchanged over the 3-year period?

2014

2015

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Brief Exercise 18-9

Selected condensed data taken from a recent balance sheet of Heidebrecht Inc. are as follows.

HEIDEBRECHT INC.

Balance Sheet (partial)

Cash $7,930,000

Short-term investments 4,930,900

Accounts receivable 12,188,000

Inventory 14,419,000

Other current assets 5,418,900

Total current assets $44,886,800

Total current liabilities $39,606,000

What are the (a) working capital, (b) current ratio, and (c) acid-test ratio? (Round ratios to 2 decimal places, e.g. 1.58 : 1.)

(a) Working capital $

(b) Current ratio

:1

(c) Acid-test ratio

:1

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Brief Exercise 18-10

Linebarger Corporation has net income of $10.46 million and net revenue of $83.65 million in 2014. Its assets are $12.16 million at the beginning of the year and $18.55 million at the end of the year.

What are Linebarger?s asset turnover and profit margin? (Round answers to 1 decimal place, e.g. 1.6 or 1.6%.)

Asset turnover

times

Profit margin

%

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Exercise 18-3

The comparative condensed balance sheets of Gurley Corporation are presented below.

GURLEY CORPORATION

Comparative Condensed Balance Sheets

December 31

2015 2014

Assets

Current assets $ 73,640 $ 79,650

Property, plant, and equipment (net) 98,500 89,720

Intangibles 26,210 39,910

Total assets $198,350 $209,280

Liabilities and stockholders? equity

Current liabilities $ 43,910 $ 47,580

Long-term liabilities 142,160 148,540

Stockholders? equity 12,280 13,160

Total liabilities and stockholders? equity $198,350 $209,280

Prepare a horizontal analysis of the balance sheet data for Gurley Corporation using 2014 as a base. (Enter negative amounts and percentages using either a negative sign preceding the number e.g. -45, -45% or parentheses e.g. (45), (45%). Round percentages to 1 decimal place, e.g. 12.3%.)

GURLEY CORPORATION

Condensed Balance Sheets

December 31

2015 2014 Increase

(Decrease) Percentage

Change from 2014

Assets

Current Assets $73,640 $79,650 $

%

Property, Plant & Equipment (net) 98,500 89,720

%

Intangibles 26,210 39,910

%

Total assets $198,350 $209,280 $

%

Liabilities and Stockholders’ Equity

Current Liabilities $43,910 $47,580 $

%

Long-term Liabilities 142,160 148,540

%

Stockholders’ Equity 12,280 13,160

%

Total liabilities and stockholders’ equity $198,350 $209,280 $

%

LINK TO TEXT

Prepare a vertical analysis of the balance sheet data for Gurley Corporation in columnar form for 2015. (Round percentages to 1 decimal place, e.g. 12.3%.)

GURLEY CORPORATION

Condensed Balance Sheet

December 31, 2015

Amount Percent

Assets

Current Assets $73,640 %

Property, Plant, and Equipment 98,500 %

Intangibles 26,210 %

Total assets $198,350 %

Liabilities and Stockholders’ Equity

Current Liabilities $43,910 %

Long-term Liabilities 142,160 %

Stockholders’ Equity 12,280 %

Total liabilities and stockholders’ equity $198,350 %

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Exercise 18-4

The comparative condensed income statements of Emley Corporation are shown below.

EMLEY CORPORATION

Comparative Condensed Income Statements

For the Years Ended December 31

2015 2014

Net sales $603,120 $500,740

Cost of goods sold 483,720 416,900

Gross profit 119,400 83,840

Operating expenses 55,680 46,800

Net income $ 63,720 $ 37,040

Prepare a horizontal analysis of the income statement data for Emley Corporation using 2014 as a base. (Round percentages to 1 decimal place, e.g. 12.3%.)

EMLEY CORPORATION

Condensed Income Statements

For the Years Ended December 31

Increase or (Decrease)

During 2015

2015 2014 Amount Percentage

Net sales $603,120 $500,740 $

%

Cost of goods sold 483,720 416,900

%

Gross profit 119,400 83,840

%

Operating expenses 55,680 46,800

%

Net income $63,720 $37,040 $

%

Brief Exercise 18-2

Schellhammer Corporation reported the following amounts in 2013, 2014, and 2015.

2013 2014 2015

Current assets $200,000 $210,000 $240,000

Current liabilities $150,000 $168,000 $184,000

Total assets $500,000 $600,000 $620,000

(b)

Perform each of the three types of analysis on Schellhammer?s current assets. (Round percentages to 0 decimal places, e.g. 43% and ratios to 2 decimal places, e.g.1.58.)

2013 2014 2015

Horizontal Analysis

Current assets

%

%

%

Vertical Analysis

Current assets

%

%

%

Ratio Analysis

Current ratio

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Brief Exercise 18-3

Using the following data from the comparative balance sheet of Goody Company.

December 31, 2015 December 31, 2014

Accounts receivable $520,000 $400,000

Inventory $840,000 $600,000

Total assets $3,000,000 $2,500,000

Illustrate horizontal analysis. (Round percentages to 0 decimal places, e.g. 12%.)

Increase or (Decrease)

Goody Company

Balance Sheet December 31, 2015 December 31, 2014 Amount Percentage

Accounts receivable $520,000 $400,000 $

%

Inventory $840,000 $600,000 $

%

Total assets $3,000,000 $2,500,000 $

%

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Brief Exercise 18-8

Vertical analysis (common size) percentages for Kochheim Company?s sales, cost of goods sold, and expenses are shown below.

Vertical Analysis 2015 2014 2013

Sales 100.0 100.0 100.0

Cost of goods sold 60.2 62.4 63.5

Expenses 25.0 25.6 27.5

(a) Calculate net income.

2015 2014 2013

Net income

(b) Did Kochheim?s net income as a percent of sales increase, decrease, or remain unchanged over the 3-year period?

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Brief Exercise 18-11 (Part Level Submission)

The following data are taken from the financial statements of Rainsberger Company.

2015 2014

Accounts receivable (net), end of year $550,000 $520,000

Net sales on account 3,960,000 3,100,000

Terms for all sales are 1/10, n/60.

(a1)

Compute for each year the accounts receivable turnover. At the end of 2013, accounts receivable (net) was $480,000. (Round answers to 1 decimal place, e.g. 1.6.)

2015 2014

Accounts receivable turnover times

times

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Brief Exercise 18-12 (Part Level Submission)

The following data are from the income statements of Haskin Company.

2015 2014

Sales $6,420,000 $6,240,000

Beginning inventory 940,000 860,000

Purchases 4,340,000 4,661,000

Ending inventory 1,020,000 940,000

(a1)

Compute for each year the inventory turnover. (Round answers to 1 decimal place, e.g. 1.6.)

2015 2014

Inventory turnover times

times

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Brief Exercise 18-13

Guo Company has owners? equity of $400,000 and net income of $66,000. It has a payout ratio of 20% and a return on assets of 15%.

How much did Guo pay in cash dividends, and what were its average assets? (Round answers to 0 decimal places, e.g. 125.)

Cash dividends $

Average assets $

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Exercise 18-2

Operating data for Navarro Corporation are presented below.

2015 2014

Net sales $750,000 $600,000

Cost of goods sold 465,000 390,000

Selling expenses 105,000 66,000

Administrative expenses 60,000 54,000

Income tax expense 36,000 27,000

Net income 84,000 63,000

Prepare a schedule showing a vertical analysis for 2015 and 2014. (Round answers to 1 decimal place, e.g. 48.5%.)

NAVARRO CORPORATION

Condensed Income Statements

For the Years Ended December 31

2015 2014

Amount Percent Amount Percent

Net sales $750,000 %

$600,000 %

Cost of goods sold 465,000 %

390,000 %

Gross profit 285,000 %

210,000 %

Selling expenses 105,000 %

66,000 %

Administrative expenses 60,000 %

54,000 %

Total operating expenses 165,000 %

120,000 %

Income before income taxes 120,000 %

90,000 %

Income taxes expense 36,000 %

27,000 %

Net income $84,000 %

$63,000 %

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Exercise 18-5

Suppose Nordstrom, Inc., which operates department stores in numerous states, has the following selected financial statement data for the year ending January 30, 2014.

NORDSTORM, INC.

Balance Sheet (partial)

(in millions) End-of-Year Beginning-of-Year

Cash and cash equivalents $ 795 $ 72

Accounts receivable (net) 2,035 1,942

Inventory 898 900

Prepaid expenses 88 93

Other current assets 238 210

Total current assets $4,054 $3,217

Total current liabilities $2,014 $1,601

For the year, net sales were $8,258 and cost of goods sold was $5,328 (in millions).

(a)

Compute the four liquidity ratios at the end of the year. (Round answers to 1 decimal place, e.g. 1.6 .)

Current ratio

:1

Acid-test ratio

:1

Accounts receivable turnover

times

Inventory turnover

times

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