Financial Statement Analysis – 1-10

This assignment is for Accountsguru.  Please see attached for homework help.  Can you complete by Wednesday?

1t27t13

Sanderson Company’s yu”r*no baiance sheets

At December 3

1

Assets

Cash

Accounts receivable, net

Merchandise in\€ntory

Prepaid expenses

Plant assets, net

Total assets

Liabilities and Equity
Accounts payable
Long-tem notes payable secured by

mortgages on plant assets
Common stock, $10 par ralue

Retained eamings

Total liabilities and equity

For Year Ended December 31

Sales

Cost ofgoods sold
Other operating expenses
lnterest expense

lncome taxes

Total costs and expenses

Net income

Eamings per share

$ 374,290

15O,2’t3

10,431
7,977

Assignnent PrintVieur

follow.

2012 201’t 20’t0

$ 27,569 $ s3,202 $ 33,568
81,518 56,965 43,89

1U,523 75,275 48,635
8,878 8,288 3,768

‘l!:* i11199 ‘1?:?’?
$471,992 $406,890 $342,500

$118,701 $ 66,701 $ 46,566

86,960 96,392 77,206
‘162,500 162,500 162,500
,.011.1 ?1,7:-7 ffi:228

$471.ss2 $406,890 $342.500

1. 10.00 points

The company’s income statements for the years ended December 31, 2O12 and 201 1, follow
2012

2011

$ 6 1 3,590

$314,729
122,502

11,137
7,2::3

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1

$ 30,679

$ 484,199

455,631

$ 28,568

$ 1.89

Additional information about the company follows.

Common stock market price, December 31,2012 $30.00

$ 1.76

To help enluate the company’s profitability, compute the foltowing ratios br 2012 and 2011:

(1)Retum on common stockholders’equity. {Do not round intennediate calculations and round your
final anslversto 1 decirnal place. Ornitthe “7”” sign in your response,)

2012

2011

(2)Price-eamings ratio on December 31. (Round your anssar€rsto 1 decimal place.)

2012

201 1

(3)Dividend yield. iRound your ansrffers to 1 decirnal place. omit the “%’ sign in your response.)

Common stock market price, December 31, 2011
Annual cash dir,idends per share in 2012
Annual cash di\idends per share in 2011

28.00
0.38
0.19

Difilculty Hard

Learning Objactive: 13-P3 Define and applyratio

Vo

%

2012 %
2011 Yo

View Hint #1

lfforksheet

Exercise 13-12 Pro{tability analysis L.O. p3

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anallsis.

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2012

2011 2010

100.0% 100.0% 100.0%
62.6 61.1 58.3
14.4 13.9 14.2

– .t:”,10 “”:11″

2012 2011 2010

1M.8% 103.6% 100.0%
102.4 108.5 100.0
106.4 101.4 100.0

Difiicultla Hard

Learning Objectiw: 13-P1 Fxplain and apply
methsds of liorizcntal analys;s.

20’t1 2010

$ 29,427 $ 35,079 $ 35,838
83,600 58,408 47,306

108,296 79,U4 51,404
9,195 8,761 3,982

26::]1308 ?-o!:*o *’1′:
$ 493,826 $ 425,712 $362,000

$ 121,733 $ 71,945 $ 46,350

93,768 97,914 79,202
163,500 163,500 .163,500
11::?2s ??:’l’ !:’*’

$ 493,826 $ 425/12 $362,000

Sales
Cost ofgoods sdd

Total expenses

Cash

Accounts receilable, net

Merchandise in\€ntory

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2. 10.00 points

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Common-size and rend percents lor Aziz Company’s sales, cost of goods sold, and expenses fflonr.

Determine net income as a percent of sales forthe following years. (Round your intermediate
calculstions to 1 decimal place and final anslvers to 2 decimal placei Omit the “7o” sign in your
response.)

Years Net income
2010 2.3 %
2011 0/o
2012 0/o

should the net income increased, decreased, or remained unchanged in this three.year period.

Net income decreased

. Net income increased
‘Remained

unchanged

Worksheet

Exercise 13-4 Determinalian of incone ef{ects fronl
ccmmon-size and {rend percenls L.O. p?. pz

:* ?::1:
3. 1o.oo points

Learning Objective:13-P2 Describe and apply
methods of \€riical analysis-

Exercise 13-7 Common-size percents L.O. p2
Sanderson Company’s year-end balance sheets follow.

At December3l 2012
Asts
Cash
Accounts recei\able, net
Merchandise inr€ntory
Prepaid expenses
Plant assets, net

Total assets

Liabilities and Equity
Accounts payable
Long-term notes payable secured by

mortgages on plant assets
Common stock, $10 par ralue
Retained eamings
Total liabilities and equity

Express the balance sheets in common-size percents. {Do not round irxtermediate calculations and
round your final ans:wers to 1 decimal place. Omit the ..?o’. sign in your response,)

Sanderson Comyany
Common-Size Comparatiue Balance Sheets

December 31, 2O1O – 2012
2011 20102012

o/o

%

2n

1mn3 Assigrrrnnt ftintMew
Prepsid expenses

Plant assets, net
Total assets

by modgages m dant asse{s
Common stock, $10 parralue

Retained eamings
Total liabilities and equity

oa : o/o

Accornts payable l
Long{em notes payaHe secured

‘ o/o o/o

n

..’-‘*-
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oh

4. {0.fl1 points

Enercrse 13-5 Common-size percent conputation and interpretation L.O. P2
The fullowing is a cornparatirie incorne statements of Geraldo Ccporation:

GERALDO CORPORANON
C.:unparatiw klcqne Statements

Ftr Years Ended December 31,2011 and 2O10
2011 2010

Sales Sales $&45,000 $ 650,000
Cost ofgoods sold 422,5M 455,000
Gross profit
45,000 $ 650,000
Cost ofgoods sold 422,5M 455,000
Gross profit

^-,*
.lt**

Operating expenses 195,000 130,000
Net income $ 227,500 $ 65,000

Express the aborc cornparati\€ incorne statements in common+ize percents. (Round your anslyers to 1
dacimal place. Omit the ‘%’ sign in your response.)

2011 2010
Sdes 10_0j0% 100.0%
Cost dgoods sdd

Grcss plofit

Operating expenses

Net income

The company’s situaton in the mGl recent year has:

i-i Rernained unchanged
,_.lknplored

i-j,Worsened

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I ‘li’r,, i…..: . ,,,::

t:t:’!tirt. 13-SC)mr,on-sizepercentcomputation ..-“.. iqi)hj9c1i\€:13-P2Describe?…:.+i)iy
,. !’\a’ .?”,.t-a L.?. P2 ,..s.iirrlis it rxr1t.J,r: alalysis.

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5. 10.flt points

Exercise 13-3 Contputation and analysis of trend percents L.O. Pl
z)13 m12 2011 20.t0 2009

Sales $629,597 $419,731 $346,885 $2S42W glB5,S00
Cost of goods sdd 311,(n3 207,218 172,974 125,417 90,895
Accounts receiwble 30,410 24,596 23,692 14,7U 12,651

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1n7lB Assignncnt PrintVieYv
Compute trend percents for the abo\e accounts, using 2009 as the base year. (Round your an$rers

to

the nearest whole percent. Omit the “%’s’gn in your response.)

20t0

Exercise 13-3 Computation and analysis of trend Learning Objectirc: 13-Pl Explain and apply
percents L.O. Pl methods of horizontal analysis.

Selected comparatirc fnancial statements of Bennington Company follow:

BENNINGTON COMPANY
Comparati\,e lncome Statements

For Years Ended December 31, 2012, 201 1 , and 2010
2012 2011 2010

$ M3jil $ 339,500 $ 235,600
266,785 .213,.96 150,7U

176,379 125,9il 84,816
62,929 46,851 31,099
1s,8:s 2st876 l:,r:,.

102,814 76,727 50,654

2013
Sales %
Cost ofgoods sold %
Accounts receivable o/o

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Worksheet

2012 2011
Yo Yo
tom
ot otmto

Difficulty Hard

2009
Yo 10Oo/.
% 100%
Yo 100o/o

Sales
Cost of goods sold

Gross profit
Selling expenses
Administrati\e expenses

Total expenses

lncome before taxes
lncome taxes

Net income

Asets
Curent assets
Longiterm in\Estments
Plant assets, net

Total assets

Liabilities and Equity
Cunent liabilities
Common stock
Other paid-in capit

al

Retained eamings

Total liabilities and equity

Seclion Break

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A 1o.oo ooints\J.

73,565
J3:683

$ 59,882 $

BENNINGTON COMPANY
Comparati\e Balance Sheets

December 31, 20’12, 2011, and 2010
2012

$ 54,297
0

,go,r:1

$ 155,134

$ 22,650
70,000
8,750

537U

$ 155,134
2011 2010

$ 42,481 $ 56,787
600 4,070

l0i,:60 :3:e4s
$ 150,641 $ 124,806

49,228

10:0e2

39,136

u,162
6:935

$ 27,227

$ 22,446 $ 21,U1
70,000 52,000
8,750 5,778

49,445 4s,187

I l-?o:11 $,’11939

Problem 13-1A Patt 1
Required:
1. Compute each yeafs cunent ratio. {Round your anst rers to’l decimal place,)

Cunentratio December31,2012:
Cunentratio December31, 2011:

to
to

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1t27t13 AssigrfiEnt Print Me ,
Cunent ratio December3l, 2010: I i to i

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Problem 13-1A Part 2
2′ Express the income statement data in cornmon€ize percents. (Round your anevers io 2 decimal

placec, Omit the ‘%’!*gn in your response.)

Sales

Costofgoods sdd

Gross pmft
Sdling expenses
Admfnistnatiw expenses

Total expenses

BENNhIGTON COMPAi.IY
CornmoFSize Cornparatiw,ncorne Statenrents

ForYears Ended December 3’1,2012,2011, and 2010
, m1? 2011- ?q]0_ .
,, ,% ‘ :o/o : oh

lncorne before taxes

lncome taxes
Net income

Worksheet Diffcul\a Had Leaming Objectirc: 13-P2 Describe and apply
meihods of vertical anal)lsis.

probtem 13-14 pari2 Leaming Objecti\e: 13-P1 Eplain and apply Leaming Objectile: l3-P3 Define and applyralio
melhods of horiantal analysis. analysis.

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8. 1o.oo poinrs

Problem 13-1A Part 3
3. Exprss the balance sheot data in trend percents with 2010 as the base year. {Round your ans\ rers

to 2 decimal placee Leave no cells blank. be certain to enter’0″ wherever required, Omit the
“t/o” sign in your response.)

BENNINGTON COMPANY
Balance Sheet Data in Trend Percents
December 3’1, 2012, 2011 , and 201 0

2012 2011 2010

| ‘,% : .o/o , :!o
Ast3
Cunent assets

Longrterm in\€tments
Plant assets

Total assets

Liabilt$os and Equity
Cunent liabilities

Cornmon stock

Retained eamings

Total liatrilities and equity

oh : i “/o ‘: o/o

Other contributed carrital i”***.

al

Wtrksheet

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methods of wrlical anallBis

Learning Objective: 13-P1 E4lain and apply
methods of honzlntal anal\6is.

9. 1o.oo points

Prablem l3-3A Transactions, twrking capital. and liquidity ratias L.O. p3
Park Corporation began the month of May with $800,000 of cunent assets, a curent ratio of2.50:1, and an
aci*test ratio of 1.70:1. During the month, it completed the following transactions (the company uses a
perpetual inusntory system).

May 2 Purchased $60,000 ofmerchandise in\entory on credit.
8 Sold merchandise inwntory that cost $65,000 for $125,000 cash.

10 Collected $26,000 cash on an account receilable.
15 Paid $23,500 cash to settle an account payable.
17 Wrote offa $5,@0 bad debt against the Allowance lbr Ooubtful Accounts account.
22 Declared a $1 per share cash dir,idend on its 60,000 shares of qrtstanding common stock.
26 Paid the diMdend declared on May 22.
27 Borrowed $100,000 cash by giring the bank a 30day, 10% note.
28 Bonowed $125,000 cash by signing a long-term secured note.
29 Used the $225,000 cash proceeds from the notes to buy new machinery.

Required:
Prepare a table showing Park’s (1) cunent ralio, (2) acid-test ratio, and (3) working capital, after each
transaction. {Do not round intermediate calculations. Round your ratiosto 2 decimal plaees and
the working cepitals to neares,t dollar amount. Omit the “$,. sign in your response.)

Transaction Cunent Ratio Acid-Test Ratio Working Capital
Beginning

May 2

May 8

May 10
May 15

May 17

May 22

May 26

May 27

May 28

May 29

Worksheet Difficulty. Hard
Problenl 13-3ATransactions.wrsrking capita!.and Learning Otrjectire: 13-P3 Denne and applyrat,o
liquidity ratios L.O. PS anal)€is.

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1 0. 1o.oo poinrs

Problem 13-4A Calculation of financial statement ratias l-O. p3
Selected year-end financial statements of McCord Corporation follow. (All sales were on credit; selected
balance sheet amounts at December 31,2010, were in\,entory, $52,900; total assets, $199,400; common
stock, $105,000; and retained eamings, $52,748.)

McCORD CORPOMTION
lncome Statement

For Year Ended December 31, 201 1
Sales $ 447,600
Cost ofgoods sold 297,550

Gross proft 150,050
Operating expenses 99,000
lnterest expense 4,900

lncome before taxes 46,150
lncome taxes

lt.’-U?]

Net income $ 27,559

McCORD CORPORATTON
Balance Sheet

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1t2il13 Assigrrrnt PrintVietry
Decernber 31, 201 1

Asts
Cash
Short-tem in\estments
Accounts r€cd\aue, net
Ndes rcceinHe (trade).
Merchandise in€ntory
Prcpaid expenses
Plant assets, net

Total assets

$ 18,0m
8,800

30,200
8,000

34,150
2,650

‘t53,300

Llabilldes and Equlty
Accornts payaHe
Accrued wages payaHe
lncorne taxes payaHe

$ 1z5oo
4,frn
2,900

$ 254,900 Total liabilities and equity $254,9$

‘These are short-term notes recei\€ble arising forn custorner (trade) sales.

Required:
Compute the lUloiving. (Ue 365 days a year. Do not round intermediate calculations and round your
ffnal anwers to ‘l decimal place. Omit lhe .’7o. dgn in your response):

(1) Cunent rdio
(2) Acid-test ratio
(3) Days’sdes uncollected
(4) h\pntory tumo\Er
(5) Days’sd6 in inwntory
(6) Debt{o-equity ratio
(7) limes int€r€st eam€d
(8) Proft margin ratio
(9) Total assEt tumo\Er

(10) Retum on total assets
(11) Retum on c(mmm stockhdders,equity

note payaue, secured
by mo.tgag€ m dant assets 72,4W

Cornmon stock 10S,m0
R€tained eamings 52,300

to

days

times

days
to
o/o

1″””–‘-‘_”””’– i
. times
-oh

o/o

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