Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 13, Problem 13.11E
Inferring Financial Information from Ratios E13-11 LO13-3 13-5
Dollar General Corporation operates general merchandise stores that feature quality merchandise at low prices. All stores are located in the United States, predominantly in small towns in 24 midwestern and southeastern states. In the current year, the company reported average inventories of $1,668 million and an inventory turnover ratio of 8.0. Average total fixed assets were $2,098 million, and the fixed asset turnover ratio was 9.0. What amount did Dollar General report as gross profit in the current year?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The following table shows financial data (year 2004) for Costco Wholesale and Wal-Mart, two major U.S. retailers.
costco ($m)
walmart ($m)
inventory
3,643.00
29,447.00
sales(net)
48,106.00
286,103.00
COGS
41,651.00
215,493.00
Assume that both companies have an average annual holding cost rate of 30 percent (i.e., it costs both retailers $3 to hold an item that they procured for $10 for one entire year). a. How many days, on average, does a product stay in Costco's inventory before it is sold? Assume that stores are operated 365 days a year. b. How much lower is, on average, the inventory cost for Costco compared to Wal-Mart of a household cleaner valued at $5 COGS? Assume that the unit cost of the household cleaner is the same for both companies and that the price and the inventory turns of an item are independent.
Russell Department Stores, Inc.
Income Statement Compared with Industry Average
Year Ended December 31, 2018
Russell
Industry Average
Net sales revenue
$780,000
100.0 %
Cost of goods sold
524,940
65.8
Gross Profit
255,060
34.2
Operating Expenses
162,240
19.7
Operating Income
92,820
14.5
Other Expenses
7,800
0.4
Net Income
85,020
14.1 %
MORE INFO: Russell/industry average
Total Assets
$480,000
100.0 %
total Liabilities
327,360
64.7
total Liabilities and Stockholders' Equity $480,000 100.0 %
SOLVE for % of total (round total to one decimal place x.x%)
Amount
Percent of total
Net Sales Revenue
780,000
Cost of goods sold
524,940
gross profit
255,060
operating expenses
162240
operating income
92820
other expenses
7800
10: Application of Financial Ratios Used to Measure Profitability
The income statement of Garnet Mfg. Corp. for 2018 shows the following:
Sales, net
P 700,000
15,000
400,000
Net credit sales
Cost of goods sold
Cost of goods manufactured
Net credit purchases
410,000
150,000
225,000
90,000
212,500
20,000
Raw materials used
Net income
Total operating expenses
Depreciation
Net income
90,000
The balance sheet figures as of December 31, 2017 and 2018 are as follows:
December 31
2017
2018
P12,500
P 25,000
Cash
17,500
28,750
Marketable securities
10,000
20,000
Accounts receivable, net
Inventories:
25,000
35,000
Finished goods
Work in process
22,500
15,000
3,750
P 150,000
37,500
17,500
10,000
Raw materials
Prepaid expenses
Total current assets
2,500
P95,000
37,500
Investments
117,500
187,500
Plant, property and equipment, net
Chapter 13 Solutions
Financial Accounting
Ch. 13 - Who are the primary users of financial statements?Ch. 13 - When considering an investment in stock, investors...Ch. 13 - How does product differentiation differ from cost...Ch. 13 - What are the two general methods for making...Ch. 13 - What are component percentages? Why are they...Ch. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What do profitability ratios focus on? What is an...Ch. 13 - What do turnover ratios focus on? What is an...Ch. 13 - What do liquidity ratios focus on? What is an...Ch. 13 - What do solvency ratios focus on? What is an...
Ch. 13 - What do market ratios focus on? What is an example...Ch. 13 - Prob. 12QCh. 13 - Explain why rapid growth in total sales might not...Ch. 13 - A company has total assets of 500,000 and...Ch. 13 - Prob. 2MCQCh. 13 - Prob. 3MCQCh. 13 - Prob. 4MCQCh. 13 - Prob. 5MCQCh. 13 - Prob. 6MCQCh. 13 - Prob. 7MCQCh. 13 - Prob. 8MCQCh. 13 - Prob. 9MCQCh. 13 - Prob. 10MCQCh. 13 - Prob. 13.1MECh. 13 - Prob. 13.2MECh. 13 - Prob. 13.3MECh. 13 - Computing the Financial Leverage Percentage...Ch. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Prob. 13.8MECh. 13 - Prob. 13.9MECh. 13 - Prob. 13.10MECh. 13 - Using Financial Information to Identify Companies...Ch. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Prob. 13.4ECh. 13 - Prob. 13.5ECh. 13 - Prob. 13.6ECh. 13 - Prob. 13.7ECh. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Inferring Financial Information from Ratios E13-11...Ch. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.1PCh. 13 - Prob. 13.2PCh. 13 - Prob. 13.3PCh. 13 - Prob. 13.4PCh. 13 - Prob. 13.5PCh. 13 - Computing Comparative Financial Statements and...Ch. 13 - Analyzing Financial Statements Using Ratios Use...Ch. 13 - Prob. 13.8PCh. 13 - Prob. 13.9PCh. 13 - Prob. 13.1APCh. 13 - Prob. 13.2APCh. 13 - Calculating Profitability, Turnover, Liquidity,...Ch. 13 - Prob. 13.4APCh. 13 - Prob. 13.5APCh. 13 - Prob. 13.6APCh. 13 - Prob. 13.1CPCh. 13 - Prob. 13.2CPCh. 13 - Comparing Companies within an Industry Refer to...Ch. 13 - Prob. 13.4CPCh. 13 - Inferring Information from the DuPont Model Ratios...Ch. 13 - Prob. 13.6CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Dollar General Corporation operates general merchandise stores that feature quality merchandise at low prices to meet the needs of middle-, low-, and fixed-income families in southern, eastern, and midwestern states. For the year ended January 31, 2014, the company reported averageinventories of $2,475 (in millions) and an inventory turnover of 4.89. Average total fixed assetswere $2,080 (million) and the fixed asset turnover ratio was 8.14.Required:1. Calculate Dollar General’s gross profit percentage (expressed as a percentage with one decimalplace). What does this imply about the amount of gross profit made from each dollar of sales?TIP: Work backward from the fixed asset turnover and inventory turnover ratios to compute theamounts needed for the gross profit percentage.2. Is this an improvement from the gross profit percentage of 31.7 percent earned during theprevious year?arrow_forwardAdenta Ltd (Adenta) assembles telecommunication equipment and sells to wholesalers and retailers. The following ratios relate to the average figures for Adenta’s industry for the year ended 31 December, 2018: Return on capital employed 20.10% Gross profit margin 32% Net profit (before tax) margin 12.50% Current ratio 1.6:1 Acid-test ratio 0.9:1 Inventory turnover period 46 days Trade receivable collection period 45 days Debt-to-equity ratio 40% Dividen yield 6% Dividendcover 3 times Adenta’s financial statements for the year to 31 December, 2018 are set out below: Statement of Profit or Loss for the year ended 31 December, 2018 Sales 48,500 Cost of…arrow_forwardCommon-Sized Income Statement Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill's data are expressed in dollars. The electronics industry averages are expressed in percentages. TannenhillCompany ElectronicsIndustryAverage Sales $4,000,000 100.0 % Cost of goods sold (2,120,000) (60.0) Gross profit $1,880,000 40.0 % Selling expenses $(1,080,000) (24.0) % Administrative expenses (640,000) (14.0) Total operating expenses $(1,720,000) (38.0) % Operating income $160,000 2.0 % Other revenue and expense: Other revenue 120,000 3.0 Other expense (80,000) (2.0) Income before income tax expense $200,000 3.0 % Income tax expense (80,000) (2.0) Net income $120,000 1.0 % a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the…arrow_forward
- Pul Company has the following details: Sales (60% is on credit) 1,500,000 Cost of Goods Sold (40% of credit sales) Year1: Year 2: Inventory 300,000 250,000 Accounts Payable 90,000 105,000 Total Assets 1,000,000 850,000 Compute the following: 1. Inventory Turnover ratio 2. Accounts Receivable turnover ratio 3. Accounts payable turnover ratio 4. Asset turnover ratioarrow_forwardComplete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data: Total assets turnover: 1.4Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 30%Total liabilities-to-assets ratio: 45%Quick ratio: 0.80Days' sales outstanding (based on 365-day year): 36.5 daysInventory turnover ratio: 3.75 Do not round intermediate calculations. Round your answers to the nearest whole dollar.arrow_forwardCommon-Sized Income Statement Revenue and expense data for the current calendar year for Sorenson Electronics Company and for the electronics industry are as follows. Sorenson Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages. SorensonElectronicsCompany ElectronicsIndustryAverage Sales $1,940,000 100 % Cost of goods sold (1,358,000) (76) Gross profit $582,000 24 % Selling expenses $(329,800) (9) % Administrative expenses (116,400) (9) Total operating expenses $(446,200) (18) % Operating income $135,800 6 % Other revenue and expense: Other revenue 38,800 4 Other expense (19,400) (3) Income before income tax $155,200 7 % Income tax expense (58,200) (5) Net income $97,000 2 % a. Prepare a common-sized income statement comparing the results of operations for Sorenson Electronics Company with the industry average. If…arrow_forward
- Balance Sheet Analysis Complete the balance sheet and sales information in the table that follows for J. White Industries, using the following financial data: Total assets turnover: 1.7 Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25% Total liabilities-to-assets ratio: 45% Quick ratio: 1.20 Days' sales outstanding (based on 365-day year): 36.5 days Inventory turnover ratio: 3.25 Do not round intermediate calculations. Round your answers to the nearest whole dollar. Partial Income Statement Information Sales Cost of goods sold Balance Sheet Information Cash Accounts receivable Inventories $ Fixed assets Total assets tA $ 400,000 Accounts payable Long-term debt Common stock Retained earnings Total liabilities and equity $ LA 50,000 100,000arrow_forwardComplete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data: Total assets turnover: 1.7Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25%Total liabilities-to-assets ratio: 45%Quick ratio: 1.00Days' sales outstanding (based on 365-day year): 36.5 daysInventory turnover ratio: 3.25 Do not round intermediate calculations. Round your answers to the nearest whole dollar. Partial Income Statement Information Sales $ Cost of goods sold Balance Sheet Assets Liabilities and Equity Cash $ Accounts payable $ Accounts receivable Long-term debt 50,000 Inventories Common stock Fixed assets Retained earnings 100,000 Total assets $ 400,000 Total liabilities and equity $arrow_forwardComplete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data: Total assets turnover: 1.7 Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 30% Total liabilities-to-assets ratio: 45% Quick ratio: 0.80 Days' sales outstanding (based on 365-day year): 36.5 days Inventory turnover ratio: 3.50 Do not round intermediate calculations. Round your answers to the nearest whole dollar. Partial Income Statement Information Sales Cost of goods sold Balance Sheet Cash Accounts receivable Inventories Fixed assets Assets Total assets $ Liabilities and Equity $ Accounts payable Long-term debt Common stock Retained earnings 400,000 Total liabilities and equity $ 50,000 100,000 400,000arrow_forward
- Common-Sized Income Statement Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill’s data are expressed in dollars. The electronics industry averages are expressed in percentages. TannenhillCompany ElectronicsIndustryAverage Sales $2,740,000 100 % Cost of goods sold 1,753,600 69 Gross profit $986,400 31 % Selling expenses $602,800 18 % Administrative expenses 219,200 7 Total operating expenses $822,000 25 % Operating income $164,400 6 % Other revenue 54,800 2 $219,200 8 % Other expense 27,400 1 Income before income tax $191,800 7 % Income tax expense 82,200 5 Net income $109,600 2 % a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. If required, round percentages to one decimal place. Enter all amounts as positive…arrow_forwardRotorua Products sells agricultural products in the burgeoning Asian market. The company's current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows: Sales Cash Accounts receivable, net Inventory Total current assets Current liabilities Sales Current assets: Cash Accounts receivable, net Inventory Total current assets Current liabilities Year 1 100.0 Year 1 $ 4,513,330 $ 86,858 414,137 805,814 $ 1,306,809 100.0 100.0 100.0 100.0 100.0 % Required: 1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. Note: Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3). % % Year 2 $ 4,867,400 $ 97,107 423,798 880,974 $ 1,401,879 $ 318,689 $ 335,942 % % % X Answer is not complete. Year 2 Year 3 $ 5,101,490 $ 88,212 447,360 824,047 $ 1,359,619 $ 324,994 % % % % % % Year 3 % % % % Year 5 Year 4 $5,485,330 $ 5,648,040 % % $ 91,910 507,318 894,402 $…arrow_forwardCommon-Sized Income Statement Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill's data are expressed in dollars. The electronics industry averages are expressed in percentages. Electronics Tannenhill Industry Company Average $1,390,000 100 % Sales 736,700 59 Cost of merchandise sold $653,300 41 % Gross profit $417,000 25 % Selling expenses Administrative expenses 152,900 10 Total operating expenses $569,900 35 % Income from operations $83,400 6 % Other revenue and expense: Other revenue 27,800 2 Other expense (13,900) 1 Income before income tax expense $97,300 7 % Income tax expense 41,700 Net income $55,600 2 % a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average. If required, round percentages to one decimal place. econ.docx Show all Type here to search 6:05 AM 59 F 局 10/30/2021 12 prt sc 00 5.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License