INSTRUCTIONSSection 1- Financial AnalysisFSA Company's Summary Financial Data(In billions, except per sharedata)20202019201820172016Net Sales30.2029.7029.1029.4028.50Gross Profit16.1017.3017.2016.8016.60Operating IncomeNet Income12.5012.9012.1012.7012.8011.900.9012.8011.6011.801.7011.80Restructuring charge (after tax)Net Income before restructuringOp Income before restructuring1.301.000.50L1012.8012.90139012.9012.2013.8013.9013.0013.2017.8020.9014.40 13 505.00Total Assets21.0019.0018.30Total Liabilities15.0013.8012.60Long Term DebtShareholder EquityTreasury Stock at cost6.606.006.005.205.406.505.705.505.204.003.506. 105.305.2029 3228.5428 2928.04Basic Earnings per share.Cash Dividends per share29.0014.5014.2014.0013.6013.0053.00Closing Stock PriceShares Outstatiding (billions)75.0063.0064.0069.000.400.410.420,410 42Using the above information, kindly prepare the following:a) Prepare the common-size financial statements (both common-size income statements andcommon-size balance sheets) for all the years. Discuss your findings.Show all

Common size financial statements are financial statements that are prepared to show each item as a…

Section 1- Financial Analysis FSA Company's Summary Financial Data (In billions, except per share data) 2020 2019 2018 2017 2016 Net Sales 30.20 29.70 28.50 29.40 16.80 29 10 Gross Profit 16.10 17.30 17.20 16.60 Operating Income Net Income 12.50 12.90 12.10 12.70 12.80 11.60 11.80 11.80 I1.70 0.50 11.90 Restructuring charge (after tax) Net Income before restructuring Op Income before restructuring 1.30 1.00 0.90 L10 12.90 12.80 12.80 12.20 12.90 13.80 13.90 33.00 13 20 13 90 Total Assets 21.00 20.90 19.00 17.80 18.30 13,50 5.00 3 50 Total Liabilities 12.60 15,00 6.60 14.40 13.80 Long Term Debt Shareholder Equity 6.00 5.20 5.40 6.00 6.50 4.00 5.70 Treasury Stock at cost 3.50 6.10 5.20 5.30 5.20 29 32 29.00 28.54 28.29 28.04 Basic Earnings per share Cash Dividends per share 14.50 14.20 14.00 13.60 13,00 Closing Stock Price Shares Outstanding tbillions) 75,00 63.00 64 00 33.00 69.00 0.40 0.41 0.42 0.41 0.42 Using the above information, kindly prepare the following: a) Prepare the common-size financial statements (both common-size income statements and common-size balance'sheets) for all the years. Discuss your findings. Show

Section 1- Financial Analysis FSA Company's Summary Financial Data (In billions, except per share data) 2020 2019 2018 2017 2016 Net Sales 30.20 29.70 28.50 29.40 16.80 29 10 Gross Profit 16.10 17.30 17.20 16.60 Operating Income Net Income 12.50 12.90 12.10 12.70 12.80 11.60 11.80 11.80 I1.70 0.50 11.90 Restructuring charge (after tax) Net Income before restructuring Op Income before restructuring 1.30 1.00 0.90 L10 12.90 12.80 12.80 12.20 12.90 13.80 13.90 33.00 13 20 13 90 Total Assets 21.00 20.90 19.00 17.80 18.30 13,50 5.00 3 50 Total Liabilities 12.60 15,00 6.60 14.40 13.80 Long Term Debt Shareholder Equity 6.00 5.20 5.40 6.00 6.50 4.00 5.70 Treasury Stock at cost 3.50 6.10 5.20 5.30 5.20 29 32 29.00 28.54 28.29 28.04 Basic Earnings per share Cash Dividends per share 14.50 14.20 14.00 13.60 13,00 Closing Stock Price Shares Outstanding tbillions) 75,00 63.00 64 00 33.00 69.00 0.40 0.41 0.42 0.41 0.42 Using the above information, kindly prepare the following: a) Prepare the common-size financial statements (both common-size income statements and common-size balance'sheets) for all the years. Discuss your findings. Show

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

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

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

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 15.17EX: Profitability ratios The following selected data were taken from the financial statements of...

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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?
Comprehensive/Spreadsheet Problem 16-15 FORECASTING FINANCIAL STATEMENTS Use a spreadsheet model to forecast the financial statements in Problems 16-13 and 16-14. 16-13 ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.'s 2014 financial statements arc shown here. Morrissey Technologies Inc.: Balance Sheet as of December 31, 2014 Morrissey Technologies Inc.: Income Statement for December 31, 2014 Sales 3.600.000 Operating costs including depreciation 3,279,720 E81T 320.280 Interest 20.280 EST 300.000 Taxes (40%} 120,000 Net Income 180.000 Per Share Data: Common stock price 45.00 Earnings per share (EPS) 1.80 Dividends per share (DPS) 1.08 Suppose that in 2015, sales increase by 10% over 2014 sales. 1hc firm currently has 100,000 shares outstanding. It expects to maintain its 2014 dividend payout ratio and believes that its assets should grow at the same rate as sales. The firm has no excess capacity. However, the firm would Like to reduce its Operating costs/Sales ratio to 87.5% and increase its total liabilities-to-assets ratio to 30%. (It believes its liabilities to-assets ratio currently is too low relative to the industry average.) The firm will raise JOO/o of the 2015 forecasted interest bearing debt as notes payable, and it will issue long-term bonds for the remainder. the firm forecasts that its before-tax cost of debt (which includes both short-term and long-term debt) is 12.5%. Assume that any common stock issuances or repurchases can be made at the firm's current stock price of S45. a. Construct the forecasted financial statements assuming that these changes are made. What are the firm's forecasted notes payable and long-term debt balances? What is the forecasted addition to retained earnings? b. If the profit margin remains at S'/o and the dividend payout ratio remains at 60%, at what growth rate in sales will the additional financing requirements be exactly zero? In other words, what is the firm's sustainable growth rate? (Hint: Set AFN equal to zero and solve for g.) 16-14 EXCESS CAPACITY Krogh Lumber's 2014 financial statements are shown here. Krogh Lumber: Balance Sheet as of December 31, 2014 (Thousands of Dollars) Krogh Lumber: Income Statement for December 31, 2014 (Thousands of Dollars) Sales 36,000 Operating costs including depredation 30,783 Earnings before interest and taxes 5,217 Interest 1,017 Earnings before taxes 4,200 Taxes (40%) 1680 Net income 2.520 Dividends (60%} 1,512 Addition to retained earnings 1,008 a. Assume that the company was operating at full capacity in 2014 with regard to all items except fixed assets; fixed assets in 2014 were being utilized to only 75% of capacity. By what percentage could 2015 sales increase over 2014 sales without the need for an increase in fixed assets? b. Now suppose 2015 sales increase by 25% over 2014 sales. Assume that Krogh cannot sell any fixed assets. AU assets other than fixed assets will grow at the same rate as sales; however, after reviewing industry averages, the firm would like to reduce its operating costs/sales ratio to 82% and increase its total liabilities-to-assets ratio to 42%. The firm will maintain its 60% dividend payout ratio, and it currently has 1 million shares outstanding. The firm plans to raise 35% of its 2015 forecasted interest-bearing debt as notes payable, and it will issue bonds for tile remainder. The firm forecasts that its before-tax cost of debt (which includes both short-term and long-term debt) is 11%. Any stock issuances or repurchases will be made at the firm's current stock price of 40. Develop Krogh's projected financial statements like those shown in Table 16.2 What are the balances of notes payable, bonds, common stock, and retained earnings?
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?
Exercise 1-53 Relationships Among the Financial Statements During 2019, Moore Corporation paid $20,000 of dividends. Moores assets, liabilities, and common stock at the end 012018 and 2019 were: Required: Using the information provided. compute Moores net income for 2019.
Question C5 Majan Ltd income statement for the year ended 31st Dec 2020 and the balance sheets as at 31st Dec 2009 and 2019 are as follows: Income statement OMR in million Revenue 312 Cost of sales (177) Gross profit 135 Distribution expenses (36) Administrative expenses (15) 84 Rental income 14 Operating profit 98 Interest payable (13) Profit before taxation 85 Taxation (18) Profit for the year 67 Balance sheet as at 31st Dec 2020 and 2019 2020 2019 OMR in million OMR in million Non – current assets Property, plant and equipment Land and buildings 155 155 Plant and machinery 157 163 312 318 Current assets Inventories 18 21 Trade receivables 73 70 Current liabilities…
Condensed financial data of Concord Inc. follow. CONCORD INC.Comparative Balance SheetsDecember 31 Assets 2022 2021 Cash $80,500 $48,700 Accounts receivable 87,900 38,600 Inventory 111,900 102,100 Prepaid expenses 29,400 27,900 Long-term investments 139,800 113,700 Plant assets 284,200 241,900 Accumulated depreciation (47,700) (49,100) Total $686,000 $523,800 Liabilities and Stockholders’ Equity Accounts payable $106,000 $63,700 Accrued expenses payable 16,500 21,200 Bonds payable 117,100 149,500 Common stock 219,000 175,100 Retained earnings 227,400 114,300 Total $686,000 $523,800 CONCORD INC.Income StatementFor the Year Ended December 31, 2022 Sales revenue $382,500 Less: Cost of goods sold…
Return on total assets ratio: net income/ avg. total assets 21,331/(321,195+225,248)/2= 0.07807= 7.8% (Amazon 2020 year) 6.0% (Amazon 2019 year) 6.37% (Walmart 2020 year) Write financial analysis report.
Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets Cash $1,013,530 $917,700 Marketable securities 1,533,990 1,520,760 Accounts receivable (net) 978,200 919,800 Inventories 730,000 569,400 Prepaid expenses 191,756 183,540 Total current assets $4,447,476 $4,111,200 Long-term investments 2,479,894 1,119,115 Property, plant, and equipment (net) 5,330,000 4,797,000 Total assets $12,257,370 $10,027,315 Liabilities Current liabilities $1,347,720 $1,776,965 Long-term liabilities: Mortgage note payable, 8% $1,840,000 $0 Bonds payable, 8% 2,260,000 2,260,000 Total long-term liabilities $4,100,000 $2,260,000 Total liabilities $5,447,720 $4,036,965 Stockholders' Equity Preferred $0.70 stock, $50 par $850,000 $850,000 Common stock, $10 par 970,000 970,000 Retained earnings 4,989,650…
Condensed financial data of Whispering Winds Corp. follow. Whispering Winds Corp.Comparative Balance SheetsDecember 31 Assets 2022 2021 Cash $ 72,720 $ 43,560 Accounts receivable 79,020 34,200 Inventory 101,250 92,565 Prepaid expenses 25,560 23,400 Long-term investments 124,200 98,100 Plant assets 256,500 218,250 Accumulated depreciation (45,000 ) (46,800 ) Total $614,250 $463,275 Liabilities and Stockholders’ Equity Accounts payable $ 91,800 $ 60,570 Accrued expenses payable 14,850 18,900 Bonds payable 99,000 131,400 Common stock 198,000 157,500 Retained earnings 210,600 94,905 Total $614,250 $463,275 Whispering Winds Corp.Income Statement DataFor the Year Ended December 31, 2022 Sales revenue…
Comparative Balance Sheets ($ in thousands) December 31 2024 2023 Assets: Cash $ 59 $ 46 Accounts receivable 115 135 Short-term investments 56 46 Inventory 230 158 Property, plant, and equipment (net) 660 595 $ 1,120 $ 980 Liabilities and Shareholders’ Equity: Current liabilities $ 270 $ 225 Bonds payable 175 175 Paid-in capital 445 445 Retained earnings 230 135 $ 1,120 $ 980 Questions Determine the return on shareholders’ equity for 2024. What does the ratio measure?
CONCORD INC.Comparative Balance SheetsDecember 31 Assets 2022 2021 Cash $80,500 $48,700 Accounts receivable 87,900 38,600 Inventory 111,900 102,100 Prepaid expenses 29,400 27,900 Long-term investments 139,800 113,700 Plant assets 284,200 241,900 Accumulated depreciation (47,700) (49,100) Total $686,000 $523,800 Liabilities and Stockholders’ Equity Accounts payable $106,000 $63,700 Accrued expenses payable 16,500 21,200 Bonds payable 117,100 149,500 Common stock 219,000 175,100 Retained earnings 227,400 114,300 Total $686,000 $523,800 CONCORD INC.Income StatementFor the Year Ended December 31, 2022 Sales revenue $382,500 Less: Cost of goods sold $135,600 Operating expenses, excluding…
10. Comparative balance sheet accounts of Sage Inc. are presented below. SAGE INC.COMPARATIVE BALANCE SHEET ACCOUNTSAS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $42,400 $33,800 Accounts Receivable 70,500 59,700 Inventory 30,300 24,200 Equity investments 22,100 38,300 Machinery 30,200 18,500 Buildings 67,500 55,800 Land 7,400 7,400 $270,400 $237,700 Credit Accounts Allowance for Doubtful Accounts $2,300 $1,500 Accumulated Depreciation—Machinery 5,500 2,300 Accumulated Depreciation—Buildings 13,500 8,900 Accounts Payable 34,700 24,700 Accrued Payables 3,300 2,700 Long-Term Notes Payable 20,800 31,000 Common Stock, no-par 150,000 125,000 Retained Earnings 40,300 41,600 $270,400 $237,700 Additional data (ignoring taxes): 1. Net income…