ACCT301 Week 3 Problem 1 and Problem 2 (Ratios Analysis) _Use it as a Guide !

    

 

     

 

 

              

 

% Sales

Sales

 

  

 

  

  $   600,000  

 

  

 

  

Problem 1
Required: Express each income statement component as a percentage of sales, and comment on the trends in each line from 2013 to 2014.
2014		%		Sales	2013	Comments
$ 1,000,000	$ 1,200,000
	Cost of goods sold	$ 450,000		$   600,000
Gross margin	$ 550,000
	Operating expenses	$ 600,000	$   450,000
Net income	$(50,000)	$   150,000

 

   

     

         

 

 

 

 

 

 

 $ 360,000.00 

     

 

 

     

   

 Sales

 

     

 Cost of goods sold

 

     

 Operating expenses

 

Problem 2
Required: Compute (1) accounts receivable turnover for 2014, (2) the inventory turnover for 2014, and (3) the net margin for 2014.
Balance sheet items	2014	2013
Accounts receivable	$ 380,000.00	$ 376,000.00
Allowance for doubtful accounts	$ (20,000.00)	$ (16,000.00)
Net accounts receivable		$ 360,000.00
Inventory	$ 480,000.00	$ 440,000.00
Income statement items
$ 3,400,000.00	$ 3,080,000.00
$ 1,600,000.00	$ 1,440,000.00
$ 780,000.00	$  680,000.00