ll Verizon LTE10:34 AM57%AAv2.cengagenow.comVertical AnalysisTwo income statements for Cornea Company follow:Cornea CompanyIncome StatementsFor Years Ended December 3120192018Fees earned$1,640,000$1,300,000Operating expenses869,200715,000Operating income$770,800$585,000a. Prepare a vertical analysis of Cornea Company's incomestatements. Enter percents as whole numbers.Cornea CompanyIncome StatementsFor Years Ended December 312019 Amount 2019 Percent2018 Amount 2018 PercentFees earned$1,640,000X $1,300,000Operating expenses 869,2002 х 715,000Operating income$770,800% X $585,000FeedbackV Check My WorkVertical analysis of the income statement states eachitem as a percentage of the fees earned. To determinethe trend, compare the percentages for the base(oldest) year with those of the most recent year.

Vertical analysis: Vertical analysis is the method of financial statement analysis, and it is…

Answered: ll Verizon LTE 10:34 AM 57% AA…

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter3: The Adjusting Process

Section: Chapter Questions

Problem 3.1ADM

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Profitability ratios The following selected data were taken from the financial statements of Robinson Inc. for December 31, 2016, 2015 and 2014: December31 2016 2015 2014 Total assets......................................... 4,800,000 4,400,000 4,000,000 Notes payable (8% interest)........................... 2,250,000 2,250,000 2,250,000 Common stock...................................... 250,000 250,000 250,000 Preferred 4% stock, 100 par (no change during year)........................... 500,000 500,000 500,000 Retained earnings................................... 1,574,000 1,222,000 750,000 The 2016 net income was 372,000, and the 2015 net income was 492,000. No dividends on common stock were declared between 2014 and 2016. a. Determine the rate earned on total assets, the rate earned on stockholders equity, and the rate earned on common Stockholders equity for the years 2015 and 2016. Round to one decimal place. b. What conclusions can be drawn from these data as to the companys profitability?
Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8 Instuctins Times preferred earned
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Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of goods sold 660.0 Gross profit 135.0 Selling expenses 73.5 EBITDA 61.5 Depreciation expenses 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expenses 4.5 Earnings before taxes (EBT) 45.0 Taxes (40%) 18.0 Net income 27.0 a. Calculate the ratios you think would be useful in this analysis. b. Construct a DuPont equation, and compare the companys ratios to the industry average ratios. c. Do the balance-sheet accounts or the income statement figures seem to be primarily responsible for the low profits? d. Which specific accounts seem to be most out of line relative to other firms in the industry? e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?
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