Question

Selected comparative financial statements of Korbin Company follow. KORBIN COMPANY Comparative Income Statements For Years Ended December 31, 2019, 2018, and 2017 2019 2018 2017 Sales $ 427,928 $ 327,828 $ 227,500 Cost of goods sold 257,613 207,515 145,600 Gross profit 170,315 120,313 81,900 Selling expenses 60,766 45, 240 30,030 Administrative expenses 38,514 28,849 18,883 Total expenses 99, 280 74,089 48,913 Income before taxes 71,035 46,224 32,987 Income tax expense 13,213 9,476 6,696 Net income $ 57,822 $ 36,748 $ 26,291

Answer 1

Solution

Current ratio
	Numerator	/	denominator	Current ratio
	Current assets	/	Current liabilities	Current ratio
2019	$        61,386.00	/	$      25,353.00	2.4	to 1
2018	$        41,086.00		$      21,493.00	1.9	to 1
2017	$        54,922.00		$      20,915.00	2.6	to 1

Alternate solution for current ratio assuming answer is needed in 2 decimal

Current ratio
	Numerator	/	denominator	Current ratio
	Current assets	/	Current liabilities	Current ratio
2019	$        61,386.00	/	$      25,353.00	2.42	to 1
2018	$        41,086.00		$      21,493.00	1.91	to 1
2017	$        54,922.00		$      20,915.00	2.63	to 1

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KORBIN COMPANY
Common size analysis
	2019		2018		2017
Sales		100.0%		100.0%		100.0%
Cost of Goods Sold		60.2%		63.3%		64.0%
Gross Profit		39.8%		36.7%		36.0%
Selling Expenses		14.2%		13.8%		13.2%
Administrative Expenses		9.0%		8.8%		8.3%
Total Expenses		23.2%		22.6%		21.5%
Income before taxes		16.6%		14.1%		14.5%
Income Taxes		3.1%		2.9%		2.9%
Net Income		13.5%		11.2%		11.6%

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KORBIN COMPANY
Balance sheet Data in trend percents
December 31, 2017, 2016 and 2016
	2019	2018	2017
Assets
Current assets	111.77%	74.81%	100.00%
Long-term investment	0.00%	32.93%	100.00%
Plant asset, net	183.29%	166.64%	100.00%
Total assets	145.30%	120.70%	100.00%
Liabilities and equity
Current liabilities	121.22%	102.76%	100.00%
Common stock	138.30%	138.30%	100.00%
other paid in capital	155.59%	155.59%	100.00%
Retained earnings	162.10%	107.03%	100.00%
Total liabilities and equity	145.30%	120.70%	100.00%