Homework Answers
ANS :-
1.a
| Ratios | 2016 | 2015 |
| Gross profit percentage = Gross profit/Sales |
= $17400/$86000 = 20.23% |
= $10400/$62000 = 16.77% |
| Return on Equity = Net income / Average stockholders equity. |
= $7790 / ($39900+ $39750)/2 = $7790/(79650)/2 = $7790 / $39825 = 19.56% |
= $2940 / ($19400 + $39900)/2 =$2940/($59300)/2 = $6950 / $29650 = 23.44% |
| Assets turnover ratio = net sales / average assets |
= $86000 / ($106900+$91750)/2 =$86000/($198650)/2 =$86000/$99325 = 0.87 |
= $62000 / ($51400+$106900)/2 =$62000/(158300)/2 =$62000/79150 = 0.78 |
1)b) N G S is more profitable in 2016.
2
| Ratios | 2016 | 2015 |
| Current ratio = Current assets / Current liabilities |
= $15750 / $12800 = 1.23 |
= $15900 / $12800 = 1.24 |
3 a.
| Ratios | 2016 | 2015 |
| Debt to assets ratio = Total liabilities / Total assets |
= $52000 / $91750 = 0.567 |
= $67000 / $106900 = 0.627 |
| Times interest earned = EBIT / Interest expense |
= $12800 / $1360 = 9.41 |
= $7800 / $3460 = 2.25 |
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Selected comparative financial statements of Korbin Company
follow:
KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2017, 2016, and
2015
2017
2016
2015
Sales
$
554,143
$
424,519
$
294,600
Cost of goods sold
333,594
269,145
188,544
Gross profit
220,549
155,374
106,056
Selling expenses
78,688
58,584
38,887
Administrative expenses
49,873
37,358
24,452
Total expenses
128,561
95,942
63,339
Income before taxes
91,988
59,432
42,717
Income taxes
17,110
12,184
8,672
Net income
$
74,878
$
47,248
$
34,045
KORBIN COMPANY...
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Part 2: Perform a vertical analysis of statement of financial
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Part 3: Perform a Horizontal Analysis of statement of
Financial Position for 2015 and 2014 & Income statement for
2015
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(in millions) 2016 2015 Net sales 10,400 9,900 Cost of goods sold (5,500) (5,200) Gross profit 4,900 4,700 Selling and administrative expenses (2,800) (2,700) Income from operations 2,100 2,000 Interest expense (300) (250) Income before income taxes 1,800 1,750 Income tax expense (420) (400) Net income 1,380 1,350 Smith and Sons, Inc. Balance Sheet 2016 2015 (in millions) Assets Current assets Cash and cash equivalents 550 750 Accounts receivable 900 800 Inventory 850 1,000 Other current assets 400 250 Total...
Times-Interest-Earned Ratio Smith and Sons, Inc. Income Statement (in millions) 2016 2015 Net sales 10,150 9,650 Cost of goods sold (5,500) (5,200) Gross profit 4,650 4,450 Selling and administrative expenses (2,800) (2,700) Income from operations 1,850 1,750 Interest expense (300) (250) Income before income taxes 1,550 1,500 Income tax expense (420) (400) Net income 1,130 1,100 300 500 Smith and Sons, Inc. Balance Sheet (in millions) 2016 2015 Assets Current assets Cash and cash equivalents Accounts receivable 900 800 Inventory...
Selected comparative financial statements of Korbin Company
follow:
KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2017, 2016, and
2015
2017
2016
2015
Sales
$
554,143
$
424,519
$
294,600
Cost of goods sold
333,594
269,145
188,544
Gross profit
220,549
155,374
106,056
Selling expenses
78,688
58,584
38,887
Administrative expenses
49,873
37,358
24,452
Total expenses
128,561
95,942
63,339
Income before taxes
91,988
59,432
42,717
Income taxes
17,110
12,184
8,672
Net income
$
74,878
$
47,248
$
34,045
KORBIN COMPANY...
For Years Ended December 31, 2017, 2016, and 2015 2017 2016 Sales $ 548,876 $ 420,484 Cost of goods sold 330,423 266,587 Gross profit 218,453 153,897 Selling expenses 77,940 58,027 Administrative expenses 49,399 37,003 Total expenses 127,339 95,030 Income before taxes 91, 114 58,867 Income taxes 16,947 12,068 Net income $ 74,167 $ 46,799 2015 $ 291,800 186,752 105,048 38,518 24,219 62,737 42,311 8,589 $ 33,722 2016 2015 KORBIN COMPANY Comparative Balance Sheets December 31, 2017, 2016, and 2015 2017...
Part 1: Ratio Analysis calculate the following ratios
Part 2: Perform a vertical analysis of statement of financial
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Part 3: Perform a Horizontal Analysis of statement of
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2015
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