Solutions to Problem 4-22 (Brigham)
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This document contains financial ratio analyses for a firm compared to industry averages from its annual report. It provides the calculations and values for key ratios such as current ratio, inventory turnover, days sales outstanding, total asset turnover, profit margin, return on equity, and debt-to-equity. The firm underperforms the industry averages on total asset turnover and return on equity but has a higher profit margin. The ratios indicate the firm should tighten its credit policies, increase sales or reduce assets to improve total asset turnover, and boost net income relative to its equity and assets to match industry return on equity. Comparisons to 2008 ratios alone could mislead investors if that year saw abnormal growth not sustained in the future.
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Sheet1BUSI 320 Comprehensive Problem 1 2016 Spring BUse the following information to answer the questions below: note: all sales are credit salesIncome Stmt info:20142015Sales $ 1,000,000$ 1,050,000less Cost of Goods Sold:400,000424,000Gross Profit600,000626,000Operating Expenses350,000365,750Earnings before Interest & Taxes250,000260,250Interest exp25,00025,500earnings before Taxes225,000234,750Taxes90,00093,900Net Income$ 135,000$ 140,850Balance Sheet info:12/31/1412/31/15Cash25,000$ 30,000Accounts Receivable50,000$ 51,000Inventory125,000$ 137,500Total Current Assets$ 200,000$ 218,500Fixed Assets (Net)$ 300,000$ 315,000Total Assets$ 500,000$ 533,500Current Liabilities$ 110,000$ 117,700Long Term Liabilities$ 180,000$ 183,000Total Liabilities$ 290,000$ 300,700Stockholder's Equity$ 210,000$ 232,800Total Liab & Equity:$ 500,000$ 533,500Compute each of the following ratios for 2014 and 2015 and indicate whether each ratio was getting "better" or "worse" from 2014 to 2015 and was "good" or "bad" compared to the Industry Avg in 2015 (round all numbers to 2 digits past the decimal place)20142015Getting Better or Getting Worse?2015 Industry Avg "Good" or "Bad" compared to Industry AvgProfit Margin0.11Current Ratio1.90Quick Ratio0.66Return on Assets.28Debt to Assets.50Receivables turnover18.00Avg. collection period*21.20Inventory Turnover**8.25Return on Equity0.55Times Interest Earned11.15*Assume a 360 day year**Inventory Turnover can be computed 2 different ways. Use the formula listed in the text (the one the text indicates many credit reporting agencies generally use)
Sheet2
Sheet3
BUSI 320 Comprehensive Problem 1
Use the following information to answer the questions below:
note: all sales are credit sales
Income Stmt info:
2013
2014
Sales
$ 1,050,000
$ 1,128,750
less Cost of Goods Sold:
325,000
346,125
Gross Profit
725,000
782,625
Operating Expenses
575,000
609,500
Earnings before Interest & Taxes
150,000
173,125
Interest exp
25,000
29,000
earnings before Taxes
125,000
144,125
Taxes
50,000
57,650
Net Income
$ 75,000
$ 86,475
Balance Sheet info:
12/31/2013
12/31/2014
Cash
60,000
$ 66,000
Accounts Receivable
80,000
$ 83,200
Inventory
110,000
$ 119,900
Total Current Assets
$ 250,000
$ 269,100
Fixed Assets (Net)
$ 300,000
$ 318,000
Total Assets
$ 550,000
$ 587,100
Current Liabilities
$ 130,000
$ 136,500
Long Term Liabilities
$ 150,000
$ 170,000
Total.
Inter CA FM homework solution-8.pdf
This document contains an index of topics related to financial management that will be discussed in class. The topics covered include accounting ratios, leverage, capital structure, cost of capital, capital budgeting, working capital management, receivables management, cash budgeting, capital budgeting and risk analysis, and dividend decisions. The index provides the page numbers for where each topic begins.
FIB - 1Question 1 (9 points)Question 1 UnsavedFor the FY 2.docx
FIB - 1
Question 1 (9 points)
Question 1 Unsaved
For the FY 2016, Alpha Company's balance sheet included the following current items: cash $40,000, accounts receivable $160,000, inventories $100,000, prepaid expenses $20,000, accounts payable $90,000, and accrued expenses $70,000. Use this information to determine the: (Round & enter your answers to one decimal place for non-dollar ratios and enter the value. For dollar ratio enter as whole dollars only.)
1. Quick Ratio
2. Current Ratio
2. Working Capital
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FIB - 2
Question 2 (6 points)
Question 2 Unsaved
For the FY 2016, Alpha Company had net sales of $950,000 and net income of $65,000, paid income taxes of $30,000, and had before tax interest expense of $15,000. Use this information to determine the: (Round & enter your answers to one decimal place and enter the value.)
1. Times Interest Earned Ratio
2. Profit Margin
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FIB - 3
Question 3 (8 points)
Question 3 Unsaved
The following financial information is for Alpha Corporation are for the fiscal years ending 2017 & 2016 (all balances are normal):
Item/Account
2017
2016
Accounts Receivable
$9,800
$9,400
Inventory
25,000
16,000
Net Sales (all credit)
80,000
71,000
Cost of Goods Sold
49,000
52,000
Net Income
7,200
6,900
Use this information to determine for FY 2017: (Round & enter your answers to one decimal place and enter the value.)
1. the inventory turnover ratio
2. number of days of inventory
3. Gross Profit Margin
4. Profit Margin
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FIB - 4
Question 4 (8 points)
Question 4 Unsaved
The following financial information is for Alpha Corporation are for the fiscal years ending 2017 & 2016 (all balances are normal):
Item/Account
2017
2016
Accounts Receivable
$9,800
$9,400
Inventory
20,000
16,000
Net Sales (all credit)
72,000
71,000
Cost of Goods Sold
54,000
52,000
Net Income
7,200
6,900
Use this information to determine for FY 2017: (Round & enter your answers to one decimal place and enter the value.)
1. the accounts receivable turnover ratio
2. average collection period accounts receivable
3. Gross Profit Margin
4. Profit Margin
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Question 5 (6 points)
Question 5 Unsaved
Alpha's net accounts receivable were $500,000 at December 31, 2015, and $600,000 at December 31, 2016. Net cash sales for 2016 were $300,000. The accounts receivable turnover for 2016 was 5.5. Use this information to determine the Fiscal Year 2016: (Round & enter your answers to one decimal place for non-dollar ratios and enter the value. For dollar ratio enter as whole dollars only.)
1. Total Net Sales
2. Total Net Credit Sales
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Question 6 (9 points)
Question 6 Unsaved
The following financial information is for Alpha Corporat ...
Max Gxl Comp Plan
This document summarizes information about a multi-level marketing company called Max that sells glutathione supplements and provides compensation for associates who enroll others. It details the company's founding, leadership team, product details, and multiple compensation plans including retail profits, team commissions, matching bonuses, and other incentives to enroll new associates. Projected first and second year earnings under the compensation plan are provided in tables.
Wiggins Corporation utilizes an accounting software pack.docx
Wiggins Corporation utilizes an accounting software package that is capable of producing a detailed aging
of outstanding accounts receivable. Following is the aging schedule as of December 31, 20X2.
Spreadsheet
f x
A B C D E
1 Age Amount Outstanding
2 0 to 30 days $1,200,000
3 31 to 60 days 700,000
4 61 to 120 days 200,000
5 Over 120 days 25,000
6
Casper Wiggins has owned and operated Wiggins Corporation for many years and has a very good sense
of the probability of collection of outstanding receivables, based on an aging analysis. The following table
reveals the likelihood of collection:
Allowance method: Aging of accounts B-07.05
Mike
Highlight
Spreadsheet
f x
A B C D E
1 Age Probability of Collection
2 0 to 30 days 98%
3 31 to 60 days 90%
4 61 to 120 days 75%
5 Over 120 days 50%
6
(a) Prepare an aging analysis and show how accounts receivable and the related allowance for
uncollectibles should appear on the balance sheet at December 31.
(b) Prepare the necessary journal entry to update the allowance for uncollectibles, assuming the
balance prior to preparing the aging was a $15,000 credit.
(c) Prepare the necessary journal entry to update the allowance for uncollectibles, assuming the
balance prior to preparing the aging was a $5,000 debit. How could the allowance account have
contained a debit balance?
Morrison Supply sells pressured air devices that assist patients with breathing disorders during sleep. These
devices are delivered to patients immediately upon completion of a diagnostics exam, and are subsequently
billed to insurance companies. Insurance companies sometime refuse to pay and/or only agree to a reduced
price. Patients are then responsible for any amount denied by the insurance company, but are often unable
or unwilling to pay. Because clinical standards of cleanliness must be maintained, Morrison is unable to ac-
cept returns for resale to others.
Morrison is reluctant to litigate to collect unpaid amounts. As a result, Morrison experiences a high rate of
uncollectible accounts, and prepares a monthly adjusting entry for uncollectibles that is equal to 20% of sales.
Morrison's Monthly sales and write-offs for the first quarter of 20X7 follow:
MONTH SALES ACTUAL WRITEOFFS
January $630,000 $100,000
February $480,000 $ 80,000
March $590,000 $140,000
(a) Prepare monthly journal entries to summarize sales on account, the recording of the provision for
uncollectibles, and the actual write-offs.
(b) The provision for uncollectibles is established at 20% of sales. Why are the monthly write-offs not
also proportional to that month's sales? Does the amount written off in a particular month impact
net income for that month?
B-07.06 Allowance method: Percentage of sales
Mike
Highlight
Supreme Vacuum uses television advertising blitzes to generate consumer interest in its highly-touted floor
cleaners. Customers are directed to a website for more information. Once on the webs.
Financial Statement Analysis ppt
The document provides examples of how to calculate various financial ratios used in analyzing financial statements. It includes calculations for current and quick ratios, average accounts receivable and related turnover ratios, inventory turnover ratios, times interest earned ratio, debt and debt to equity ratios, return on sales, return on assets, earnings per share, price earnings ratio, dividend yield, and dividend payout ratio. The document demonstrates how to perform the calculations using financial data from sample company income statements and balance sheets.
JLL Louisville Office Outlook - Q1 2017
The first quarter of 2017 saw positive leasing activity and national wins for Louisville. Two large leases totaling 165,000 square feet were signed by national companies selecting Louisville. Vacancy rates decreased while rents and absorption increased. With continued economic and job growth, the Class A market is projected to tighten further. New speculative developments were announced to help meet demand across various submarkets.
Ipo Pitch
Solstice Wonderland has been successful by providing innovative family entertainment. It aims to expand its business within the US and internationally. The financial documents show that in year 1 Solstice Wonderland had $11.5 million in net income, and projects a minimum 5% annual increase over the next 3 years as it expands its operations and customer base. Going public will provide the funding needed for continued growth.
Introductory Financial Accounting for Business 1st Edition Edmonds Solutions ...
Full download : https://goo.gl/pGctpg Introductory Financial Accounting for Business 1st Edition Edmonds Solutions Manual
CCM 03.13.17 Item #7 1st Qtrly Report 17
- The quarterly financial report summarizes the city's revenues and expenditures for the first quarter of FY 2016-2017 as of December 30, 2016. Overall revenues and expenditures for the general fund and utility fund were within budget for the quarter.
- Property tax collections were at 58% of the annual budget for the general fund portion. Revenues for the general fund were at 43% of budget while expenditures were at 22% of budget for the quarter.
- Revenues for the utility fund, which includes water and sewer, were at 24% of budget while expenditures for the utility fund were at 17% of budget for the quarter. The city's financial position remains positive at the end of the first quarter.
KMSFeedback Example DEC 2015
This document provides a monthly report for a sample lawyer at a law firm. It includes statistics on the lawyer's billable hours, work in progress, fees collected, and time spent on various tasks. The lawyer exceeded billing targets for the month and year-to-date. Unbilled work in progress and outstanding accounts decreased slightly from the previous month.
Unlock Hidden Profits from Your QuickBooks
The document summarizes a webinar about unlocking hidden profits from QuickBooks. It discusses measuring financial performance, the financial operating cycle, and seven steps to profit mastery including planning, monitoring finances, understanding costs and pricing, managing cash flow and growth. It also provides examples of using financial ratios to analyze a company's stability, profitability, efficiency and working capital management to identify issues and opportunities.
Financial-Stmt-Analysis-Bootcamp-Slides.pdf
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B PROBLEMSP23-1B (L02,4) (SCF—Indirect Method) The followi.docx
B PROBLEMS
P23-1B (L02,4) (SCF—Indirect Method) The following are Sanibel Corp.’s comparative balance sheet accounts at Decem-
ber 31, 2017 and 2016, with a column showing the increase (decrease) from 2016 to 2017.
Additional information:
1. On December 31, 2016, Sanibel acquired 25% of Island Co.’s common stock for $420,000. On that date, the carrying value
of Island’s assets and liabilities, which approximated their fair values, was $1,680,000. Island reported income of $220,000
for the year ended December 31, 2017. No dividend was paid on Island’s common stock during the year.
2. During 2016, Sanibel loaned $500,000 to POI Co., an unrelated company. POI made the first semi-annual principal repay-
ment of $50,000, plus interest at 10%, on December 31, 2016. POI is current on the loan as of December 31, 2017.
3. On January 2, 2017, Sanibel sold equipment costing $100,000, with a carrying amount of $31,000, for $20,000 cash.
4. On December 31, 2017, Sanibel entered into a capital lease for a new factory. The present value of the annual rental pay-
ments is $850,000, which equals the fair value of the building. Sanibel made the first rental payment of $120,000 when due
on January 2, 2018.
5. Net income for 2017 was $285,000.
6. Sanibel declared and paid cash dividends for 2017 and 2016 as follows.
Instructions
Prepare a statement of cash flows for Sanibel Corp. for the year ended December 31, 2017, using the indirect method.
(AICPA adapted)
1
COMPARATIVE BALANCE SHEETS
Increase
2017 2016 (Decrease)
Cash $ 650,000 $ 510,000 $ 140,000
Accounts receivable 1,260,000 1,090,000 170,000
Inventory 1,538,000 1,370,000 168,000
Property, plant, and equipment 2,680,000 1,763,000 917,000
Accumulated depreciation (850,000) (760,000) (90,000)
Investment in Island Co. 475,000 420,000 55,000
Loan receivable 350,000 450,000 (100,000)
Total assets $6,103,000 $4,843,000 $1,260,000
Accounts payable $1,080,000 $ 910,000 $ 170,000
Income taxes payable 90,000 75,000 15,000
Dividends payable 100,000 60,000 40,000
Capital lease obligation 850,000 0 850,000
Common stock, $1 par 400,000 400,000 0
Paid-in capital in excess of 2,100,000 2,100,000 0
par—common stock
Retained earnings 1,483,000 1,298,000 185,000
Total liabilities and stockholders’ equity $6,103,000 $4,843,000 $1,260,000
2017 2016
Declared December 15, 2017 December 15, 2016
Paid February 28, 2018 February 28, 2017
Amount $100,000 $60,000
c23_Kieso_IA_16e_PB.indd Page 1 12/07/16 9:00 AM f-389 c23_Kieso_IA_16e_PB.indd Page 1 12/07/16 9:00 AM f-389 /208/WB01908/XXXXXXXXXXXXX/ch23/text_s/208/WB01908/XXXXXXXXXXXXX/ch23/text_s
2 Chapter 23 Statement of Cash Flows
P23-2B (L02,4) (SCF—Indirect Method) The comparative balance sheets for Queen Corporation show the following
information.
Additional data related to 2017 are as follows.
1. Equipment that had cost $20,000 and was 60% depreciated at time of disposal was sold for $2,000.
2. $18,000 of th ...
Afternoon Sessions
The document provides information on integrating financial statements for startups. It discusses the importance of having accurate income statements, balance sheets, and cash flow statements to understand business profitability, stability, and liquidity. Common mistakes made by startups are listed, such as not understanding revenue drivers or underestimating costs. Recommendations are given for financial statement formats and assumptions. Sample financial statements including income statements, balance sheets, and cash flow statements are presented for a fictional startup called EZ Vein over a five year period.
Week five exercise_assignment_b
The document contains financial information and ratios for multiple companies. It provides income statements, balance sheets, and calculations of key financial ratios such as current ratio, quick ratio, inventory turnover, accounts receivable turnover, profit margin, return on assets, return on equity, debt to assets, and interest coverage. The ratios are calculated to assess the liquidity, asset efficiency, profitability, leverage, and debt servicing ability of the companies.
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Introductory Financial Accounting for Business 1st Edition Edmonds Solutions ...
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B PROBLEMSP23-1B (L02,4) (SCF—Indirect Method) The followi.docx
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Solutions to Problem 4-22 (Brigham)
- 1. University of St. La Salle FIN1 A.Y. 2016-2017 a. (Dollar amounts in thousands.) Industry Firm Average sliabilitieCurrent assetsCurrent = $330,000 $655,000 = 1.98 2.0 sliabilitieCurrent sInventorieassetsCurrent = $330,000 500,241$$655,000 = 1.25 1.3 DS O = 365Sales/ receivableAccounts = 11.04$4,4 $336,000 = 76.3 days 35 days sInventorie Sales = $241,500 $1,607,500 = 6.66 6.7
- 2. University of St. La Salle FIN1 A.Y. 2016-2017 assetsTotal Sales = $947,500 $1,607,500 = 1.70 3.0 Sales incomeNet = $1,607,500 $27,300 = 1.7% 1.2% assetsTotal incomeNet = $947,500 $27,300 = 2.9% 3.6% equityCommon incomeNet = $361,000 $27,300 = 7.6% 9.0% assetsTotal debtTotal = $947,500 $586,500 = 61.9% 60.0% b. For the firm, ROE = PM T.A. turnover EM = 1.7% 1.7 $361,000 $947,500 = 7.6%. For the industry, ROE = 1.2% 3 2.5 = 9%. Note: To find the industry ratio of assets to common equity, recognize that 1 – (Total debt/Total assets) = Common equity/Total assets. So, Common equity/Total assets = 40%, and 1/0.40 = 2.5 = Total assets/Common equity. c. The firm’s days sales outstanding ratio is more than twice as long as the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, or both. While the company’s profit margin is higher than the industry average, its other profitability ratios are low compared to the industry—net income should be higher given the amount of equity and assets. However, the company seems to be in an average liquidity position and financial leverage is similar to others in the industry. d. If 2008 represents a period of supernormal growth for the firm, ratios based on this year will be distorted and a comparison between them and industry averages will have little meaning. Potential investors who look only at 2008 ratios will be misled, and a return to normal conditions in 2009 could hurt the firm’s stock price.