Question

In addition to common-size financial statements, common–base year financial statements are often used. Common–base year financial statements are constructed by dividing the current year account value by the base year account value. Thus, the result shows the growth rate in the account.

  

Prepare the common-size balance sheet and common–base year balance sheet for the company. Use 2014 as the base year. (Do not round intermediate calculations. Enter your common-size answers as a percent and your common–base year answers as a times. Round your common size answers to 2 decimal places, e.g., 32.16, and common-base year answers to 4 decimal places, e.g., 32.1616.)

  

	JARROW CORPORATION
		2014		Common-size			2015		Common-size			Common–base year
Assets
Current assets
Cash	$	8,814			%		$10,754			%
Accounts receivable		22,053			%		24,537			%
Inventory		38,422			%		43,397			%
Total	$	69,289			%		$78,688			%
Fixed assets
Net plant and equipment	$	216,970			%		$244,940			%
Total assets	$	286,259			%		$323,628			%
Liabilities and Owners’ Equity
Current liabilities
Accounts payable	$	42,498			%		$47,484			%
Notes payable		19,064			%		18,635			%
Total	$	61,562			%		$66,119			%
Long-term debt	$	25,600			%		$32,600			%
Owners' equity
Common stock and paid-in surplus	$	39,600			%		$40,800			%
Retained earnings		159,497			%		184,109			%
Total	$	199,097			%		$224,909			%
Total liabilities and owners' equity	$	286,259			%		$323,628			%

Answer 1

JARROW CORPORATION
	2014	Common-size = value of individual balance sheet item/value of total assets	2015	Common-size = value of individual balance sheet item/value of total assets	Common–base year = value of individual item of 2015 balance sheet / value of same individual item of 2014 balance sheet
Assets
Current assets
Cash	8,814	3.08%	$10,754	3.32%	1.2201
Accounts receivable	22,053	7.70%	24,537	7.58%	1.1126
Inventory	38,422	13.42%	43,397	13.41%	1.1295
Total	69,289	24.21%	$78,688	24.31%	1.1356
Fixed assets		0.00%
Net plant and equipment	216,970	75.79%	$244,940	75.69%	1.1289
Total assets	286,259	100.00%	$323,628	100.00%	1.1305
Liabilities and Owners’ Equity
Current liabilities
Accounts payable	42,498	14.85%	$47,484	14.67%	1.1173
Notes payable	19,064	6.66%	18,635	5.76%	0.9775
Total	61,562	21.51%	$66,119	20.43%	1.0740
Long-term debt	25,600	8.94%	$32,600	10.07%	1.2734
Owners' equity
Common stock and paid-in surplus	39,600	13.83%	$40,800	12.61%	1.0303
Retained earnings	159,497	55.72%	184,109	56.89%	1.1543
Total	199,097		$224,909	69.50%	1.1296
Total liabilities and owners' equity	286,259	100.00%	$323,628	100.00%	1.1305