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• 180 outof180points (100%)
Simon Company's year-end balance sheets follow.
At December 31 2014 2013 2012 Assets Cash $ 31,600 $ 35,500 $ 37,400 Accounts receivable, net 88,500 61,000 51,000 Merchandise inventory 112,000 83,600 52,500 Prepaid expenses 10,400 9,450 5,000
Plant assets, net 278,000 257,000 234,000
Total assets $ 520,500 $446,550 $ 379,900
Liabilities and Equity Accounts payable $ 129,200 $ 73,000 $ 50,000 Long-term notes payable secured by mortgages on plant assets 96,000 100,000 82,200
Common stock, $10 par value 162,000 162,000 162,000
Retained earnings 133,300 111,550 85,700
Total liabilities and equity $ 520,500 $446,550 $ 379,900
The company's income statements forthe y ears ended December 31, 2014 and 2013, follow.
For Year Ended December 31 Sales Cost of goods sold
Other operating expenses Interest expense Income taxes
Total costs and expenses
Net income
Earnings per share
2014 $675,000
$398,250
202,500 12,300 9,550
622,600
$ 52.400
$ 3.23
2013 $630,000
$390,600 144,900 13,000
8,925
557,425
$ 72,575
$ 4.48
Evaluate the company's efficiency and profitabili~/ by computing the following for 2014 and 2013.
1 . award: 10 out of 10.00
·· ·· ·· ·· ·· ·· ··l>oinu;- ·· (1)Profit margin ratio.
Choose Numerator:
Net income ./ 1201 4 $ 52,400./
201 3 $ 72,575./
Profit Margin Ratio
Choose Denominator: Profit Margin Ratio
Net sales ./ ± "'"''"'" ""' .$ 675,000./ 7.8%
$ 630,000./ 11.5%
g.vard:
2 10 out of . 10.00
·· · · · · · ·points · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · .. (2)Total asset turnover.
Choose Numerator: ----Net sales ./
Tota I Asset Turnover
c:noose Denominator: Total Asset Turnover
- Average total assets ./ = I Total asset turnover
$ 483,525./ ~ 1.4 times 2014
2013
$
$
675,000./ I
630,000./ I $ 413,225./ = 1.5 times
3. S"Nflrd:
10 out of 10.00
(3)Return on total assets.
Choose Numerator: --.......
Return On Total Assets
Choose Denominator: ..--"'I
2014
2013
Net income
52,400./
72,575./
Average total assets ./
$ 483,525./
$ 413,225./
Return On Total Assets
= Return on total assets --1--
= 10.8%
= 17.6%
{The foUovdng inforn1ation applies to the questions displayed belov1.]
Simon Company's year-end balance sheets follow.
At December 31 2014 2013 2012 Assets Cash $ 30,521 $ 35,330 $ 36,791 Accounts receivable, net 88,458 61,221 48,578 Merchandise inventory 107,980 80,098 51,746 Prepaid expenses 9,542 9,001 3,969
Plant assets, net 265,733 247,310 219,716
Total assets $ 502,234 $432,960 $ 360,800
Liabilrties and Equity Accounts payable $ 126,307 $ 73,1 70 $ 47,1 49 Long-term notes payable secured by mortgages on plant assets 93,476 102,568 78,939
Common stock, $10 par value 162,500 162,500 162,500
Retained earnings 119,951 94,722 72,212
Total liabilities and equity $ 502,234 $432,960 $ 360,800
The company's income statements for the years ended December 31, 2014 and 2013, follow.
For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income taxes
Total costs and expenses
Net income
Earnings per share
2014 $652,904
$398,271 202,400
11,099 8,488
620,258
$ 32,646
$ 2.01
2013 $515,222
$334,894 130,351
11,850 7,728
484,823
$ 30,399
$ 1.87
Calculate the company's long-term risk and capital structure positions at the end of 2014 and 2013 by computing tl1e following ratios.
4. SW91'd: 10 out of 10.00
(1) Debt and equity ratios.
Choose Numerator:
Total liabilities
201 4: $
1201 3: T$
Choose Numerator:
Total equi~/
2014: $
1201 3: $
I
v'j I
219,783v' I
175,738v' I
I
v'j I
282,451v' I
257,222v' I
Debt Ratio
Choose Denominator: = Debt Ratio
JTotal assets v' = Debt ratio
$ 502,234v' = 43.8%
1 $ 432.960v' = 40.6%
Egui!}! Ratio ~
Choose Denominator: = Equity Ratio
JTotal assets v' = Equity ratio
$ 502,234v' = 56.2%
$ 432,960v' = 59.4% - -
SW91'd:
5 10 out of . 10.00
·····························points···· (2)Debt-to-eQuity ratio.
Debt-T0-Eaui1V Ratio
Choose Numerator: I Choose Denominator: ---~~ ~~~· 1-----11Total liabilities -10 Total eQui~/ 201 4:
2013:
$ 219.783_.I I $
$ 175,738_.I $
v'.l = 282,451_.I =
257,222_.I =
l Debt-To.Equity Ratio
Debt-to-eQui~/ ratio
0.78 to 1
0.68 to 1
6. award: 10 out of 10.00
(3) Times interest earned.
Choose Numerator:
Income before interest and inc tax
1201 4: $
12013: $
Tines Interest Earned
Choose Denominator: Tmes Interest Earned
Interest expense
$
$
./ = Times interest earned +--~1--
11,099./ = 4. 7 times
11,850./ = 4.2 times
award:
7 10 out of • 10.00 · .................. pomts ............................................................................................... .
Simon Company's year-end balance sheets follow.
At December 31 2014 2013 2012 Assets Cash $ 31,067 $ 35,225 $ 38,596 Accounts receivable, net 88,242 62,916 50,952 Merchandise inventory 110,947 84,818 55,360 Prepaid expenses 10,205 9,342 4,331
Plant assets, net 286,105 261,635 236,761
Total assets $526,566 $453,936 $ 386,000
Liabilrties and Equity Accounts payable $ 131,115 $ 78,249 $ 50,952 Long-term notes payable secured by mortgages on plant assets 100,974 104,405 87,012
Common stock, $10 par value 162,500 162,500 162,500
Retained earnings 131,977 108,782 85,536
Total liabilities and equi~/ $526,566 $453,936 $ 386,000
(1)Compute the current ratio forthe year ended 20 14, 2013, and 2012.
Current Ratio
Choose Numerator: I Choose Denominator: = Current Ratio
I Current assets .I~ Current liabilities .I~ Current ratio -
2014: $ 240,461./ I $ 131, 115./ = 1.83 to 1
2013: $ 192,301./ I $ 78,249./ = 2.46 to 1
201 2. $ 1 49,239./ I $ 50,952./ = 2.93 to 1
(2)Cornpute the acid-test ratio for the year ended 2014, 2013, and 2012.
Acid-Test Ratio
ClKlose Numerator: I ClKlose Denominator: Acid-Test Ratio ~~....-~..-~~~
Gash
2014: $
2013: $
2012:._J$
./ + Short-term investment~./ + Current receivables ./
31,067.,I + •$ 0 + $ 88,242.,I +---1--
35, 225 .,I + $ 0 + $ 62,916.,I
38,596.,I~ $ 0 + $ 50,952.,I
I Current liabilities ./ = Acid-test ratio
$ 131, 115.,I = 0.91 to 1
$ 78,249.,I = 1.25 to 1
$ 50,952.,I = 1.76 to 1 I
sward:
8 10 out of • 10.00
.......................... points···· Simon Company's year-end balance sheets follow.
At December 31 2014 2013 2012 Assets Cash $ 25,351 $ 29,930 $ 30,560 Accounts receivable, net 74,211 51,859 41, 158 Merchandise inventory 94,230 67,842 43,833 Prepaid expenses 8,327 7,701 3,361 Plant assets, net 227,566 213,086 192,888
Total assets $429,685 $370,418 $311,800
Liabilities and Equity Accounts payable $103,782 $ 63,853 $ 41,569 Long-term notes payable secured by mortgages on plant assets 79,973 86,048 68,908
Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 82,430 57,017 37,823
Total liabilities and equity $429,685 $370,418 $311,800
Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final answers to 1 decimal place.)
Cash
Accounts receivable, net
Merchandise inventor/
Prepaid expenses
Plant assets, net
Total assets
Accounts payable
SIMON COMPANY
Conmon-Size Comparative Balance Sheets
December 31, 2012-2014
2014 2013
59%.I 8.1%v/
17.3%.I 14.0%.I
21.9%.I 18.3%v/
1.9%v/ 2.1%v/
53 0%.I 57 5%.I
100.0%.I 100.0%.I
24.2%.I 17.2%.I
Long-term notes payable secured by 18.6%.I 23.2%.I I mortgages on plant assets
Common stock, $10 par 38.1%.I 44.1%.I
BRetained earnings 19.2%.I 15.4%v/
Total liabilities and equ1~1 100.0%.I 100.0%.I
2012
98%v/
13.2%.I
14.1%.I
1.1%v/
61 9%.,J
100.0%.I
13.3%v/
22 1%.I
52.4%.I
12.1%.I
100.0%.I
Simon Company's year-end balance sheets follow .
At December 31 2014 2013 2012 Assets Cash $ 25,226 $ 29,487 $ 30,107 Accounts receivable, net 73, 112 51,602 40, 143 Merchandise inventor/ 91,924 68,188 43, 184 Prepaid expenses 8,1 24 7,740 3,345
Plant assets, net 224,936 207,916 184,321
Total assets $423,322 $364,933 $ 301,100
Liabilities and Equity Accounts payable $106,461 $ 62,290 $ 40, 143 Long-term notes payable secured by mortgages on plant assets 80,380 84,774 67,209
Common stock, $10 par value 162,500 162,500 162,500
Retained earnings 73,981 55,369 31,248
Total liabilities and equi~/ $423,322 $364,933 $ 301,100
The company's income statements for the years ended December 31, 2014 and 2013, follow. Assume that all sales are on credit:
For Year Ended December 31 Sales Cost of goods sold
Other operating expenses Interest expense Income taxes
Total costs and expenses
Net income
Earnings per share
2014 $550,319
$335,695
170,599 9,355 7,154
522,803
$ 27,516
$ 1.69
2013 $434,270
$282,276
109,870 9,988 6,514
408,648
$ 25,622
$ 1.58
9. sward: 10 out of 10.00 · .......... " points .............................................................................. · .................................................................................................... .
(1} Compute days' sales uncollected. (Use 365 days a year.)
Dais' Sales Uncollected
Choose Numerator: I Choose Denominator: x Days = Days' Sales Uncollected .. .. [ Accounts receivable ./ I JNetsales ./ x 365./ = Days' Sales Uncollected
- - -201 4: $ 73, 112./ I $ 550,319./ x 365./ = 48.5 days
-2013: $ 51,602./ I $ 434,270./ x 365./ = 43.4 days
sward:
10 10 out of . 10.00 ................... points ..................................................................................................................... .
(2) Compute accounts receivable turnover.
Choose Nwnerator: ,... ____ _ 2014:
2013:
Net sales
$
$
.... --550,319./
434,270./
Accounts Receivable Turnover
Choose Denominator:
Aver age accounts receivable, net ./
$
$
62,357./
45,873./
Accounts Receivable Turnover
~ccounts receivable turnover
= -1- 8.8 times
= 9.5 times
award:
11 10 out of . 10.00
........................... polnrs ................................................................................................................................ .. (3) Compute inventory turnover.
Inventor.! Turnover ~
Choose Numerator: I uchoose Denominator: Cost of goods sold ./ I 1 Ave rage inventory ./ -
f 2014: $ 335,695./ I !$ 80,056./
' $ ,2013: $ 282,276./ I 55,686./
~ Inventory Turnover
= Inventory turnover
= 4.2 times - --= 5.1 times -
sward:
12 10 out of . 10.00
··················po!nnr ······················································································································ (4) Compute days' sales in inventor/ . (Use 365 days a year.)
Days' Sales In Inventory
Choose Numerator: Choose Denominator: x
Ending inventory ./ Cost of goods so Id ./ x 201 4: $ 91,924./ $ 335,695./ x 2013: $ 68,188./ $ 282,276./ x
Days Days' Sales In Inventory
365./ = Days' sales in inventory
365./ = 99.9 days
365./ = 88.2 days
13. award: 10 out of 10.00
· ·· ·· ·· ·· ····poifits .... The following information for Tide Corporation:
($thousands) Net sales Cost of goods sold
2013 $801,810
392,887
2012 $453,000
134,088
Determine the 2012 and 2013 common-size percents for cost of goods sold using net sales as the base.
I'----,
2013:
2012:
Coomon-Size Percent for Cost of Goods Sold usina Net Sales as the base:
Choose Numerator: I Choose Denominator:
Analysis Period Cost of Goods Sold
$ 392,887./
$ 134,088./
Analysis Period Net Sales ./ = $ 801,810./ = $ 453,000./ =
Common-Size Percents --1
49.0%
29.6%
. ,,... I Question # 14 (of 18) · I next ~
porn ts 2015 2014 2013 2012 2011
Sales $ 533,786 $ 348,880 $ 277,992 $ 193,050 $ 143,000 Cost of goods sold 274,681 179,679 145,076 100,156 72,930 Accounts receivable 25,942 20,375 19,015 11,293 9,767
Compute trend percents for the above accounts, using 2011 as the base year.
Trend Percent for Net Sales:
Choose Numerator: Choose Denominator:
Analysis period net sales Base year net sales ./ = Sales
2015: $ $ 143,000./ 4- 373%
2014: $ 348,880./ $ 143,000./ 244%
2013: $ 277,992./ I $ 143,000./ 194%
2012: $ 193,050./ I .$ 143,000./ = 135%
Trend Percent for Cost of Goods Sold: Choose Numerator: I Choose Denominator:
Analysis period cost of goods sold ./ I Base year cost of goods sold ./ = Cost of goods sold
2015: $ 274.681./ I $ 72,930./ 4- 377%
2014: $ 179,679./ $ 72,930./ 246%
2013: $ 145,076./ I $ 72,930./ 199%
2012: $ 100,156./ I .$ 72,930./ = 137%
Trend Percenlfor Accounts Receivables:
Choose Numerator: Choose Denominator:
Analysis period accounts receivable Base year accounts receivable ./ = Accounts receivable
2015: $ 25,942./ $ 9,767./ 4- 266%
2014: $ 20,375./ $ 9,767./ 209%
2013: $ 19,015./ I $ 9,767./ 195%
2012: $ 11,293./ I .$ 9,767./ = 116%
15. sward: 10 out of 10.00
·························poii'its·· Common-size and trend percents for Rus~/nail Company's sales, cost of goods sold, and expenses follow.
Sales Cost of goods sold Total expenses
Common-Size Percents 2014 2013 2012
100.0% 100.0% 100.0% 63.4 61.2 56.7 14.3 13.8 14.1
Trend Percents 2014 2013 2012
104.4% 103.2% 100.0% 116.7 111.4 100.0 105.9 101.0 100.0
Determine the net income for the following years. (Enter all amounts as positive values.)
2014 201J 2012
Sales $ 104,400.,/ $ 103,200.,/ $ 100,000
66,169.,/ 63, 164.,/ 56,700 Cost of Goods Sold
Total Expenses
Netlncome
14,932.,/ 14,241.,/ 14,1001
1$ I
23,299 $ 25,795 1$
Did the net income increase, decrease, or remain unchanged in this three-year period?
0 Remained unchanged 0 Net income increased ® Net income decreased
29,200 I
sward:
16 10 out of . 10.00 .................. · poiilts ................................................................................. ..
Which of the following items are part of financial reporting but are not included as part of generalpurpose financial statements? (Select all that apply .)
~ Stock price information and analysis
0 Statement of cash flovts
~ tv1anagement discussion and analysis of financial performance
0 Income statement
~ C-Ompany nev1s releases
0 Balance sh-eet
D Financial statement notes 0 Statement of sh.areholders' equity
~ Prospectus
17. award: 10 out of 10.00
· ············poii'its ··············································································································································· The following information is for Tide Corporation:
($ thousands) Net sales Cost of goods sold
2013 $801,810
392,887
2012 $453,000
134,088
Determine the 2012 and 2013 trend percents for net sales using 2012 as the base year.
I'----,
2013:
201 2:
Trend Percentfor Net Sales:
Choose Numerator: I Choose Denominator: "'"'--Analysis Period Net Sales .I Base year Net Sales .I = $ 801,810./ $ 453,000./ = .,_ $ 453,000./ $ 453,000./ = ----
Trend Percent
177.0%
100.0%
award:
18 10 out of . 10.00 ............. poir'its ........................................................................... ..
Compute t11e annual dollar changes and percent c11anges for eac11 of the following accounts. (Decreases should have a minus sign in front of them. Round Percent Change to one decimal place.)
Short-term investments Accounts receivable Notes payable
--Percent Change =
2013 $374,634
97,364 0
f. Short-term investments $
-!
Accounts receivable ' -1 Notes payable
2012 $234,000
101,000 88,000
Percent Challlll!
60.1%./
(36)%v'
(1 00.0)%./