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Week 10 homework

December 15, 2020

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
                  

Additional information for 2017:

  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.