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1. Prepare comparative balance sheets for 20 x 2 and 20 x 1, showing peso and percentage increases or decreases (Horizontal Analysis). 2. Prepare income statement for the year ended December 31, 20 x 2 with common size percentages (Vertical Analysis). 3. Prepare comparative common-size balance sheets as of December 31, 20 x 2 and 20 x 1 (Vertical Analysis)

1. Prepare comparative balance sheets for 20 x 2 and 20 x 1, showing peso and percentage increases or decreases (Horizontal Analysis). 2. Prepare income statement for the year ended December 31, 20 x 2 with common size percentages (Vertical Analysis). 3. Prepare comparative common-size balance sheets as of December 31, 20 x 2 and 20 x 1 (Vertical Analysis)

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 4PA: Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall...
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REQUIREMENTS: Prepare the following REPORTS in GOOD FORM: 1. Prepare comparative balance sheets for 20 x 2 and 20 x 1, showing peso and percentage increases or decreases (Horizontal Analysis). 2. Prepare income statement for the year ended December 31, 20 x 2 with common size percentages (Vertical Analysis). 3. Prepare comparative common-size balance sheets as of December 31, 20 x 2 and 20 x 1 (Vertical Analysis) 4. A. Evaluate the firm's short-term solvency for 20 x 2 by computing: a. Working Capital b. Current Ratio c. Acid Test Ratio d. Receivable Turn-over e. Age of Receivables (use 365 days) f. Inventory Turn-over g. Working Capital Turn-over B. Evaluate the firm's long term solvency for 20x 2 by computing h. Debt to Equity Ratio c. Evaluate the firm's operational efficiency for 20 x 2 by computing i. Gross margin Ratio j. Profit margin Ratio k. Asset Turn -over Ratio 1. Return on Owners' Equity D. Make an investment analysis for 20 X 2 by computing m. Equity Ratio n. Return on Investment (ROI) o. Payback period
Transcribed Image Text:REQUIREMENTS: Prepare the following REPORTS in GOOD FORM: 1. Prepare comparative balance sheets for 20 x 2 and 20 x 1, showing peso and percentage increases or decreases (Horizontal Analysis). 2. Prepare income statement for the year ended December 31, 20 x 2 with common size percentages (Vertical Analysis). 3. Prepare comparative common-size balance sheets as of December 31, 20 x 2 and 20 x 1 (Vertical Analysis) 4. A. Evaluate the firm's short-term solvency for 20 x 2 by computing: a. Working Capital b. Current Ratio c. Acid Test Ratio d. Receivable Turn-over e. Age of Receivables (use 365 days) f. Inventory Turn-over g. Working Capital Turn-over B. Evaluate the firm's long term solvency for 20x 2 by computing h. Debt to Equity Ratio c. Evaluate the firm's operational efficiency for 20 x 2 by computing i. Gross margin Ratio j. Profit margin Ratio k. Asset Turn -over Ratio 1. Return on Owners' Equity D. Make an investment analysis for 20 X 2 by computing m. Equity Ratio n. Return on Investment (ROI) o. Payback period
NAME Year and Section_ The following are the balance sheet and income statement data of PROSPERITY INC. Balance Sheet Accounts (December 31) 20X 2 20 X 1 Cash 150,000 283,000 Marketable Securities . 850,000 1,000,000 Accounts Receivable - net 500,000 1,000,000 Inventories 750,000 500,000 Land . 500,000 500,000 Building – net Machinery and Equipment – net 550,000 500,000 1,700,000 1,500,000 Other Assets 400,000 90,000 400,000 Prepaid Expenses. Notes Payable, Trade Accounts Payable, Trade Expenses Payable 100,000 100,000 150,000 610,000 790,000 40,000 60,000 Long Term Notes - Due 2025 2,500,000 2,250,000 15% Preferred Stock, P100 par Common Stock, P10 par Retained Earnings 500,000 1,500,000 250,000 500,000 1,500,000 .... . 523,000 20 x2 Income Statement Accounts Sales . 5,250,000 250,000 Sales Returns and allowances Inventory, December 31, 20 x 2 500,000 Inventory, December 31, 20 x 1. 750,000 Purchases 2,750,000 .... Selling Expenses Administrative Expenses (including Depreciation P250,000).. 600,000 400,000 Interest on Long term Notes Income Taxes, 35% 250,000 Additional Information: Dividends paid on preferred stock Dividends paid on common stock Market price per share on common stock. 75,000 162,000 18 ........**....
Transcribed Image Text:NAME Year and Section_ The following are the balance sheet and income statement data of PROSPERITY INC. Balance Sheet Accounts (December 31) 20X 2 20 X 1 Cash 150,000 283,000 Marketable Securities . 850,000 1,000,000 Accounts Receivable - net 500,000 1,000,000 Inventories 750,000 500,000 Land . 500,000 500,000 Building – net Machinery and Equipment – net 550,000 500,000 1,700,000 1,500,000 Other Assets 400,000 90,000 400,000 Prepaid Expenses. Notes Payable, Trade Accounts Payable, Trade Expenses Payable 100,000 100,000 150,000 610,000 790,000 40,000 60,000 Long Term Notes - Due 2025 2,500,000 2,250,000 15% Preferred Stock, P100 par Common Stock, P10 par Retained Earnings 500,000 1,500,000 250,000 500,000 1,500,000 .... . 523,000 20 x2 Income Statement Accounts Sales . 5,250,000 250,000 Sales Returns and allowances Inventory, December 31, 20 x 2 500,000 Inventory, December 31, 20 x 1. 750,000 Purchases 2,750,000 .... Selling Expenses Administrative Expenses (including Depreciation P250,000).. 600,000 400,000 Interest on Long term Notes Income Taxes, 35% 250,000 Additional Information: Dividends paid on preferred stock Dividends paid on common stock Market price per share on common stock. 75,000 162,000 18 ........**....
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