# Week 10 homework

December 15, 2020 3 min read

I need all work to be shown, meaning I need to understand how the answers were achieved.

E144 The comparative condensed income statements of Emley Corporation are shown below.

 EMLEY CORPORATION Comparative Condensed Income Statements For the Years Ended December 31 2017 2016 Net sales \$660,000 \$600,000 Cost of goods sold 483,000 420,000 Gross profit 177,000 180,000 Operating expenses 125,000 120,000 Net income \$ 52,000 \$ 60,000

Instructions

1. Prepare a horizontal analysis of the income statement data for Emley Corporation using 2016 as a base. (Show the amounts of increase or decrease.)
2. Prepare a vertical analysis of the income statement data for Emley Corporation in columnar form for both years.

E14-7 Frizell Company has the following comparative balance sheet data.

 FRIZELL COMPANY Balance Sheets December 31 2017 2016 Cash \$ 15,000 \$ 30,000 Accounts receivable (net) 70,000 60,000 Inventory 60,000 50,000 Plant assets (net) 200,000 180,000 \$345,000 \$320,000 Accounts payable \$ 50,000 \$ 60,000 Mortgage payable (6%) 100,000 100,000 Common stock, \$10 par 140,000 120,000 Retained earnings 55,000 40,000 \$345,000 \$320,000

1. Net income was \$25,000.
2. Sales on account were \$410,000. Sales returns and allowances were \$20,000.
3. Cost of goods sold was \$198,000.

Instructions

Compute the following ratios at December 31, 2017.

1. Current ratio.
2. Acid-test ratio.
3. Accounts receivable turnover.
4. Inventory turnover.

E14-11 Wiemers Corporation’s comparative balance sheets are presented on the next page.

 WIEMERS CORPORATION Balance Sheets December 31 2017 2016 Cash \$  4,300 \$  3,700 Accounts receivable (net) 21,200 23,400 Inventory 10,000 7,000 Land 20,000 26,000 Buildings 70,000 70,000 Accumulated depreciation—buildings (15,000) (10,000) Total \$110,500 \$120,100 Accounts payable \$ 12,370 \$ 31,100 Common stock 75,000 69,000 Retained earnings 23,130 20,000 Total \$110,500 \$120,100

Wiemers’s 2017 income statement included net sales of \$100,000, cost of goods sold of \$60,000, and net income of \$15,000.

Instructions

Compute the following ratios for 2017.

1. Current ratio.
2. Acid-test ratio.
3. Accounts receivable turnover.
4. Inventory turnover.
5. Profit margin.
6. Asset turnover.
7. Return on assets.
8. Return on common stockholders’ equity.
9. Debt to assets ratio.

P145 Selected financial data of Target Corporation and Wal-Mart Stores, Inc. for a recent year are presented here (in millions).

 Target Corporation Wal-Mart Stores, Inc. Income Statement Data for Year Net sales \$61,471 \$374,526 Cost of goods sold 41,895 286,515 Selling and administrative expenses 16,200 70,847 Interest expense 647 1,798 Other income (expense) 1,896 4,273 Income tax expense 1,776 6,908 Net income \$ 2,849 \$ 12,731 Balance Sheet Data (End of Year) Current assets \$18,906 \$ 47,585 Noncurrent assets 25,654 115,929 Total assets \$44,560 \$163,514 Current liabilities \$11,782 \$ 58,454 Long-term debt 17,471 40,452 Total stockholders’ equity 15,307 64,608 Total liabilities and stockholders’ equity \$44,560 \$163,514

 Target Corporation Wal-Mart Stores, Inc. Beginning-of-Year Balances Total assets \$37,349 \$151,587 Total stockholders’ equity 15,633 61,573 Current liabilities 11,117 52,148 Total liabilities 21,716 90,014

 Other Data Average net accounts receivable \$ 7,124 \$  3,247 Average inventory 6,517 34,433 Net cash provided by operating activities 4,125 20,354

Instructions

1. For each company, compute the following ratios.
• (1) Current ratio.
• (2) Accounts receivable turnover.
• (3) Average collection period.
• (4) Inventory turnover.
• (5) Days in inventory.
• (6) Profit margin.
• (7) Asset turnover.
• (8) Return on assets.
• (9) Return on common stockholders’ equity.
• (10) Debt to assets ratio.
• (11) Times interest earned.
2. Compare the liquidity, profitability, and solvency of the two companies.