Yuehua Telecom Inc. and Guangxin Technology Ltd. are two competing ICT corporations based in Shenzhen Special Economic Zone, China. Both companies’ stocks are traded at Shenzhen Stock Exchange. The comparative financial statements of Yuehua and Guangxin for the last four years (2016 – 2019) are shown in the Attachments 1 and 2: Instructions:(B) Evaluate each company’s trends for sales, gross profit, and net income as disclosed on the comparative income statement. Attachment 2: Comparative Income StatementComparative Income StatementYuehua Telecom Inc. and Guangxin Technology Ltd.For the Years Ended at December 31: 2016, 2017, 2018, 2019(Currency Unit in Million Chinese Yuan, ¥1,000,000)Yuehua Telecom Inc.Guangxin Technology Ltd.20192018201720162019201820172016SalesCost of Goods Sold009*460¥540430110¥528¥516410¥330105225¥330420108¥320100220¥2700618075Gross Profit140106145Operating ExpensesIncome from OperationsInterest ExpenseIncome (Loss) before Income TaxesIncome Taxes [(Recovered)]Net Income (Loss)568450605058505685140608010510012060609686602440147060(20)[(10)]半(10)60585635¥3529¥2928半2840¥40303012¥12¥30¥30Dividends DeclaredPreferredCommon¥20¥0¥10¥12¥10¥10¥10¥10¥10¥10¥10¥10¥10¥15¥0¥10Market Price Per Common Share¥1,250¥1,000¥950¥900¥800¥200¥1,200¥100(In Single-Unit Chinese Yuan, Not in Million)* According to the tax law of Shenzhen Special Economic Zone, a 'strategic' ITC company that suffered a loss in a fiscal year can ask for arefund of 50% (i.e., corporate tax rate) of the loss amount from the tax paid in previous fiscal year. So '[(10)]' means Guangxin got a ¥10million refund of tax from government. Thus, the net loss for Guangxin for 2018 is: - 20 - (- 10) = - 20 + 10 = – 10. Attachment 1: Comparative Statement of Financial PositionComparative Statement of Financial PositionYuehua Telecom Inc. and Guangxin Technology Ltd.At December 31 of the Years 2016, 2017, 2018, and 2019(Currency Unit in Million Chinese Yuan, ¥1,000,000)Yuehua Telecom Inc.Guangxin Technology Ltd.20192018201720162019201820172016AssetsCurrent Assets¥185535¥165397¥562¥155392¥547¥140378¥518¥480599¥450603¥1.053¥410572¥982¥381Non-current Assets, at Carrying AmountTotal Assets601¥982¥720¥1,079Liabilities半180Current LiabilitiesBonds Payable¥160¥135¥130¥110¥272¥251¥17012% Due in 10 Years15% Due in 7 Years120400672400400400580Total Liabilities280135130110651570Shareholders' EquityShare CapitalPreferred: 200,000 shares eachCommon200200200200200200200200100100Yuehua: 100,000 sharesGuangxin: 50,000 shares1001005015740750Retained EarningsTotal Equity5016241250152140127427117417108408152440402402Total Liabilities and Equity羊720¥562¥547¥518¥1,079¥1,053¥982¥982

Sales, gross profit, and net income are increased gradually from 2016 through 2019. Net income is…

Yuehua Telecom Inc. and Guangxin Technology Ltd. are two competing ICT corporations based in Shenzhen Special Economic Zone, China. Both companies’ stocks are traded at Shenzhen Stock Exchange. The comparative financial statements of Yuehua and Guangxin for the last four years (2016 – 2019) are shown in the Attachments 1 and 2: Instructions: (B) Evaluate each company’s trends for sales, gross profit, and net income as disclosed on the comparative income statement.

Yuehua Telecom Inc. and Guangxin Technology Ltd. are two competing ICT corporations based in Shenzhen Special Economic Zone, China. Both companies’ stocks are traded at Shenzhen Stock Exchange. The comparative financial statements of Yuehua and Guangxin for the last four years (2016 – 2019) are shown in the Attachments 1 and 2: Instructions: (B) Evaluate each company’s trends for sales, gross profit, and net income as disclosed on the comparative income statement.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter4: Internal Control And Cash

Section: Chapter Questions

Problem 69.3C

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