Homework Answers
Requirement (a) -
Common Size Income Statement for each company
|
Memphis and Billings Company |
||||
|
Common size income statement |
||||
|
Memphis ($) |
% |
Billing ($) |
% |
|
|
Sales |
15,00,000 |
100.0 |
15,00,000 |
100.0 |
|
Cost of goods sold |
10,50,000 |
70.0 |
11,25,000 |
75.0 |
|
Gross Profit |
4,50,000 |
30.0 |
3,75,000 |
25.0 |
|
Operating Expenses |
3,50,000 |
23.3 |
2,50,000 |
16.7 |
|
Net Income |
1,00,000 |
6.7 |
1,25,000 |
8.3 |
Requirement (b) - Return on assets and return on equity
Return on asset (ROA)
Return on asset (ROA) = [Net Income / Total Assets] x 100
Memphis (ROA) = 5.6% [$100,000 / 18,00,000] x 100
Billing (ROA) = 6.9% [$125,000 / 18,00,000] x 100
Return on Equity (ROE)
Return on Equity (ROE) = [Net Income / Stockholders’ equity] x 100
Memphis (ROE) = 13.9% [$100,000 / 720,000] x 100
Billing (ROE) = 17.4% [$125,000 / 720,000] x 100
Requirement (c)
Billing Company is more profitable from the stockholders’ perspective, since it has the higher Return on Equity of 17.4% as compared to Memphis Company
Requirement (d) – Memphis Company is the discounter, Since it has the lower Net Profit Margin of 6.7%
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The following information is available for the Memphis and Billings companies: Sales Cost of goods sold...
The following information is available for the Memphis and Billings companies: $ Sales Cost of goods...
The following information is available for the Memphis and Billings companies: $ Sales Cost of goods sold Operating expenses Total assets Stockholders' equity Memphis 946,400 654,200 244,600 1,140,000 340,000 Billings $1,147,200 732,200 301,000 1,150,000 380,000 Required a. Prepare a common size income statement for each company. b. Compute the return on assets and return on equity for each company. c. Which company is more profitable from the stockholders' perspective? d. One company is a high-end retailer, and the other operates...
The following information is available for the Memphis and Billings companies: Required a. Prepare a common...
The following information is available for the Memphis and
Billings companies:
Required
a. Prepare a common size income statement for each
company.
b. Compute the return on assets and return on
equity for each company.
c. Which company is more profitable from the
stockholders’ perspective?
d. One company is a high-end retailer, and the
other operates a discount store. Which is the discounter?
Sales Cost of goods sold Operating expenses Total assets Stockholders' equity Memphis $1,240,960 800, 480 338, 240...
Exercise 4-19A (Algo) Using common size statements and ratlos to make comparisons LO 4-8 The following...
Exercise 4-19A (Algo) Using common size statements and ratlos to make comparisons LO 4-8 The following information is available for the Memphis and Billings companies Memphis Billings Sales $1,282, 480 $1,220,280 Cost of goods sold 681,280 765,280 Operating expenses 254,680 322,00 Total assets 1,340.ee 1,288,ese Stockholdersequity 370.000 380.000 Required a. Prepare a common size income statement for each company. b. Compute the return on assets and return on equity for each company c. Which company is more profitable from the...
k -Chapter 36 Saved Exercise 3-18 Using common size statements and ratlos to make comparisons LO...
k -Chapter 36 Saved Exercise 3-18 Using common size statements and ratlos to make comparisons LO 3-5 At the end of 2018 the following information is available for Billings and Phoneix companies Billings Phoneix 53,000,e00 $3,00e Cost of goods sold 1,80,e00 2,100 780 3,758,880 3,758 Stockholders' equity 1,8e0,8e0 1,200 Sales Operating expenses Total assets 960,800 Required a. Prepare common size income statements for each company b. One company is a high-end retailer. and the other operates a discount store. Which...
2018 2017 Income Statement Information Sales revenue Cost of goods sold Net income $ $ 10,440,000...
2018 2017 Income Statement Information Sales revenue Cost of goods sold Net income $ $ 10,440,000 6,827,760 360,000 8,400,000 5,900,000 248,000 Balance Sheet Information Current assets Long-term assets $ 1,600,000 2,200,000 $ 1,500,000 1,900,000 Total assets $ 3,800,000 $ 3,400,000 $ Current liabilities Long-term liabilities Common stock Retained earnings 1.200,000 1,500,000 800,000 300,000 900.000 1,500,000 800,000 200,000 Total liabilities and stockholders' equity 3,800,000 $ 3,400,000 Required: 1. Calculate the following profitability ratios for 2018 (Round your answers to 1 decimal...
The following income statements were drawn from the annual reports of the Atlanta Company and the...
The following income statements were drawn from the annual reports of the Atlanta Company and the Boston Company: Atlanta $ 36,100 16.670 19.30 Bonton. $ 88,600 64,520) Net sales Cost of goods sold Gross margin Less Operating exp. Selling and admin. exp. Net income (12,180) 7,250 115,866) 8,214 $ $ "All figures are reported in thousands of dollars Required a-1. Compute the gross margin percentages and return-on-sales ratios of Atlanta and Boston (Round your answers to the nearest whole number.)...
Selected financial statement data for Homer Company are presented below. Net sales Cost of goods sold...
Selected financial statement data for Homer Company are presented below. Net sales Cost of goods sold Interest expense Net income Total assets (ending) Total common stockholders' equity (ending) $1,500,000 700,000 10,000 205,000 900,000 600,000 Total assets at the beginning of the year were $800,000; total common stockholders' equity was $500,000 at the beginning of the period. Calculate asset turnover. (Round answer to 2 decimal placea, e-8. 15.21%.) Asset turnover --/0.75 Question Part Score Compute the profit margin.(Round answer to 1...
The following income statements were drawn from the annual reports of the Atlanta Company and the...
The following income statements were drawn from the annual reports of the Atlanta Company and the Boston Company Net Bales Coat of goods sold Gross margin Less: Operating exp. Selling and admin. exp. Net income Atlanta $ 210,000 (126, 000) 84,000 Boston $ 230,000 (179,400) 50, 600 (67,200) (32, 200) $ 16,800 $ 18,400 "All figures are reported in thousands of dollars. Required a-1. Compute the gross margin percentages and return-on-sales ratios of Atlanta and Boston a-2. One of the...
The following income statements were drawn from the annual reports of the Atlanta Company and the...
The following income statements were drawn from the annual
reports of the Atlanta Company and the Boston Company:
*All figures are reported in thousands of dollars.
Required
*All figures are reported in thousands of dollars.
a-1. Compute the gross margin percentages and
return-on-sales ratios of Atlanta and Boston. (Round your
answers to the nearest whole number.)
a-2. One of the companies is a high-end retailer that
operates in exclusive shopping malls. The other operates discount
stores located in low-cost, standalone...
At the end of the current year, the following information is available for both the Pulaski...
At the end of the current year, the following information is available for both the Pulaski Company and the Scott Company. Pulaski CompanyScott CompanyTotal assets$1,800,000$900,000Total liabilities720,000480,000Total equity1,080,000420,000Required1. Compute the debt-to-equity ratio for both companies.2. Comment on your results and discuss the riskiness of each company’s financing structure.
The following information is available for the Memphis and Billings companies: $ Sales Cost of goods sold Operating expenses Total assets Stockholders' equity Memphis 946,400 654,200 244,600 1,140,000 340,000 Billings $1,147,200 732,200 301,000 1,150,000 380,000 Required a. Prepare a common size income statement for each company. b. Compute the return on assets and return on equity for each company. c. Which company is more profitable from the stockholders' perspective? d. One company is a high-end retailer, and the other operates...
The following information is available for the Memphis and
Billings companies:
Required
a. Prepare a common size income statement for each
company.
b. Compute the return on assets and return on
equity for each company.
c. Which company is more profitable from the
stockholders’ perspective?
d. One company is a high-end retailer, and the
other operates a discount store. Which is the discounter?
Sales Cost of goods sold Operating expenses Total assets Stockholders' equity Memphis $1,240,960 800, 480 338, 240...
Exercise 4-19A (Algo) Using common size statements and ratlos to make comparisons LO 4-8 The following information is available for the Memphis and Billings companies Memphis Billings Sales $1,282, 480 $1,220,280 Cost of goods sold 681,280 765,280 Operating expenses 254,680 322,00 Total assets 1,340.ee 1,288,ese Stockholdersequity 370.000 380.000 Required a. Prepare a common size income statement for each company. b. Compute the return on assets and return on equity for each company c. Which company is more profitable from the...
k -Chapter 36 Saved Exercise 3-18 Using common size statements and ratlos to make comparisons LO 3-5 At the end of 2018 the following information is available for Billings and Phoneix companies Billings Phoneix 53,000,e00 $3,00e Cost of goods sold 1,80,e00 2,100 780 3,758,880 3,758 Stockholders' equity 1,8e0,8e0 1,200 Sales Operating expenses Total assets 960,800 Required a. Prepare common size income statements for each company b. One company is a high-end retailer. and the other operates a discount store. Which...
2018 2017 Income Statement Information Sales revenue Cost of goods sold Net income $ $ 10,440,000 6,827,760 360,000 8,400,000 5,900,000 248,000 Balance Sheet Information Current assets Long-term assets $ 1,600,000 2,200,000 $ 1,500,000 1,900,000 Total assets $ 3,800,000 $ 3,400,000 $ Current liabilities Long-term liabilities Common stock Retained earnings 1.200,000 1,500,000 800,000 300,000 900.000 1,500,000 800,000 200,000 Total liabilities and stockholders' equity 3,800,000 $ 3,400,000 Required: 1. Calculate the following profitability ratios for 2018 (Round your answers to 1 decimal...
The following income statements were drawn from the annual reports of the Atlanta Company and the Boston Company: Atlanta $ 36,100 16.670 19.30 Bonton. $ 88,600 64,520) Net sales Cost of goods sold Gross margin Less Operating exp. Selling and admin. exp. Net income (12,180) 7,250 115,866) 8,214 $ $ "All figures are reported in thousands of dollars Required a-1. Compute the gross margin percentages and return-on-sales ratios of Atlanta and Boston (Round your answers to the nearest whole number.)...
Selected financial statement data for Homer Company are presented below. Net sales Cost of goods sold Interest expense Net income Total assets (ending) Total common stockholders' equity (ending) $1,500,000 700,000 10,000 205,000 900,000 600,000 Total assets at the beginning of the year were $800,000; total common stockholders' equity was $500,000 at the beginning of the period. Calculate asset turnover. (Round answer to 2 decimal placea, e-8. 15.21%.) Asset turnover --/0.75 Question Part Score Compute the profit margin.(Round answer to 1...
The following income statements were drawn from the annual reports of the Atlanta Company and the Boston Company Net Bales Coat of goods sold Gross margin Less: Operating exp. Selling and admin. exp. Net income Atlanta $ 210,000 (126, 000) 84,000 Boston $ 230,000 (179,400) 50, 600 (67,200) (32, 200) $ 16,800 $ 18,400 "All figures are reported in thousands of dollars. Required a-1. Compute the gross margin percentages and return-on-sales ratios of Atlanta and Boston a-2. One of the...
The following income statements were drawn from the annual
reports of the Atlanta Company and the Boston Company:
*All figures are reported in thousands of dollars.
Required
*All figures are reported in thousands of dollars.
a-1. Compute the gross margin percentages and
return-on-sales ratios of Atlanta and Boston. (Round your
answers to the nearest whole number.)
a-2. One of the companies is a high-end retailer that
operates in exclusive shopping malls. The other operates discount
stores located in low-cost, standalone...
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