Loose-leaf for Fundamentals of Financial Accounting with Connect
5th Edition
ISBN: 9781259619007
Author: Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 13.4PB
1.
To determine
To complete: The vertical analysis of Company SA
2.
To determine
To determine: The performance of the Company SA in fuel and oil as compared to the previous year.
3.
To determine
To Identify: whether Company SA net margin has increased or decreased in the year 2013.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Case 1: Vertical Analysis of Profit and LossPrepare a vertical analysis of the income statements of GMA from 2007 to 2010 by usingRevenues as the base.1. Describe the trend of revenues from 2007 to 2010. What observations can be drawn?2. Describe the trend of direct costs from 2007 to 2010. What observations can be drawn?3. Describe the trend of operating expenses from 2007 to 2010. What observations can be drawn?4. Describe the trend of operating income from 2007 to 2010. What observations can be drawn?5. Describe the trend of net income from 2007 to 2010. What observations can be drawn?
A condensed income statement for Weber Associates and a partially completed vertical analysis follow.
Required:
1. Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year, Cost of
Goods Sold was 31 percent of Net Revenues, computed as ($1,397 Ă· $4,571).
2. Does Cost of Goods Sold, as a percentage of Net Revenues, represent better or worse performance in 2019 as compared to 2018?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year,
Cost of Goods Sold was 31 percent of Net Revenues, computed as ($1,397 Ă· $4,571). (Decreases should be indicated by a
minus sign. Round your answers to the nearest whole percent.)
Net Revenues
Cost of Goods Sold
Research and Development Expense
Sales and Marketing Expense
General and Administrative Expense
Income from Operations
Other…
A company’s comparative statements are given below. Please conduct the following analyses
(hint: use of a spreadsheet is recommended for ease of computation):a. Horizontal analysis (trend analysis) on the income statement
b. Vertical analysis (common size financial statement analysis) on the income statement
c. Calculate the three profitability ratios for the year 2017 and show how ROE can be derived from the DuPont formula for this company.
d. What do the analyses tell you about the company’s financial performance?
Chapter 13 Solutions
Loose-leaf for Fundamentals of Financial Accounting with Connect
Ch. 13 - What is the general goal of trend analysis?Ch. 13 - Prob. 2QCh. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What benchmarks are commonly used for interpreting...Ch. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Slow Cellars current ratio increased from 1.2 to...Ch. 13 - From last year to this year, Colossal Companys...Ch. 13 - From last year to this year, Berry Bam reported...Ch. 13 - Explain whether the following situations, taken...
Ch. 13 - What are the two essential characteristics of...Ch. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - 1. Which of the following ratios is not used to...Ch. 13 - Prob. 2MCCh. 13 - Prob. 3MCCh. 13 - Analysts use ratios to a. Compare different...Ch. 13 - Which of the following ratios incorporates stock...Ch. 13 - Prob. 6MCCh. 13 - Prob. 7MCCh. 13 - A bank is least likely to use which of the...Ch. 13 - Prob. 9MCCh. 13 - (Supplement 13A) Which of the following items is...Ch. 13 - Calculations for Horizontal Analyses Using the...Ch. 13 - Calculations for Vertical Analyses Refer to M13-1....Ch. 13 - Interpreting Horizontal Analyses Refer to the...Ch. 13 - Interpreting Vertical Analyses Refer to the...Ch. 13 - Prob. 13.5MECh. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Inferring Financial Information Using the Current...Ch. 13 - Prob. 13.10MECh. 13 - Identifying Relevant Ratios Identify the ratio...Ch. 13 - Prob. 13.12MECh. 13 - Analyzing the Impact of Accounting Alternatives...Ch. 13 - Describing the Effect of Accounting Decisions on...Ch. 13 - Prob. 13.1ECh. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Computing Profitability Ratios Use the information...Ch. 13 - Prob. 13.5ECh. 13 - Matching Each Ratio with Its Computational Formula...Ch. 13 - Computing and Interpreting Selected Liquidity...Ch. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Prob. 13.11ECh. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.14ECh. 13 - Analyzing the Impact of Alternative Inventory...Ch. 13 - Prob. 13.1CPCh. 13 - Analyzing Comparative Financial Statements Using...Ch. 13 - Prob. 13.3CPCh. 13 - Prob. 13.4CPCh. 13 - Prob. 13.5CPCh. 13 - Prob. 13.6CPCh. 13 - Prob. 13.7CPCh. 13 - Prob. 13.1PACh. 13 - Analyzing Comparative Financial Statements Using...Ch. 13 - Prob. 13.3PACh. 13 - Prob. 13.4PACh. 13 - Interpreting Profitability, Liquidity, Solvency,...Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 13.7PACh. 13 - Prob. 13.1PBCh. 13 - Prob. 13.2PBCh. 13 - Prob. 13.3PBCh. 13 - Prob. 13.4PBCh. 13 - Interpreting Profitability, Liquidity, Solvency,...Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 13.7PBCh. 13 - Prob. 13.1SDCCh. 13 - Prob. 13.2SDCCh. 13 - Prob. 13.5SDCCh. 13 - Prob. 13.6SDCCh. 13 - Prob. 13.7SDCCh. 13 - Prob. 13.1CC
Knowledge Booster
Similar questions
- Given the income statement for the MLC (Table 4–7) and balance sheet(Table 4–4), answer the following:a. Calculate the following ratios for 2012: operating profit margin, net profitmargin, operating return on assets, net return on assets, and return onequity.b. In a written explanation, describe what each ratio means.c. In a brief paragraph, describe the overall profitability of the MLC.arrow_forwardWhich of the following is a technique for reviewing relationships on an income statement by assigning net sales as 100%? A. Ratio analysis. B. Current ratio. C. Horizontal analysis. D. Vertical analysis.arrow_forwardPerforming horizontal analysis—income statement Data for Mulberry Designs, Inc. follow: Requirements Prepare a horizontal analysis of the comparative income statement of Mulberry Designs, Inc. Round percentage changes to one decimal place. Why did 2018 net income increase by a higher percentage than net sales revenue?arrow_forward
- If you are told that LSJ Company’s net income (12/31/2023) increased 55% when compared to net income (12/31/2022) …this would represent an example of what type of analysis: a. Vertical Analysis b. Horizontal Analysis c. Ratio Analysisarrow_forwardUse the following tables to answer the question:  LOGIC COMPANY Income Statement For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Gross sales 19,800 15,600 Sales returns and allowances 900 100 Net sales 18,900 15,500 COGS 11,800 8,800 Gross profit 7,100 6,700 Depreciation 780 640 Selling and administrative expenses 2,800 2,400 Research 630 540 Miscellaneous 440 340 Total operating expenses 4,650 3,920 Income before interest and taxes 2,450 2,780 Interest expense 640 540 Income before taxes 1,810 2,240 Provision for taxes 724 896 LOGIC COMPANY Balance Sheet For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Current assets 12,300 9,400 Accounts receivable 16,900 12,900 Merchandise inventory 8,900 14,400 Prepaid expenses 24,400 10,400 Total current assets 62,500 47,100 Building (net) 14,900 11,400 Land 13,900 9,400 Total plant and equipment 28,800 20,800 Total assets 91,300 67,900 Accounts payable 13,400 7,400 Salaries payable 7,500 5,400 Total current…arrow_forwardQuestion 1 Mabel is a potter and sells her pottery at stalls that she rents in four tourist information centres across the south of England. Extracts from her financial statements for the years ended 31 December 2021 and 2020 are shown below. Statement of profit or loss for the year ended 31 December: 2021 28,900 |(16,500) 12,400 (3,800) 8,600 |(4,000) 4,600 2020 Revenue 27,200 (14,000) 13,200 (3,600) 9,600 Cost of sales Gross profit Operating expenses Operating profit Non-operating expenses Net profit 9,600 Statement of financial position as at 31 December: 2021 Non-current assets Current assets Total assets 22,660 4,360 27,020 2020 20,920 3,750 24,670 Equity Non-current liabilities Current liabilities Equity and liabilities 20,940 3,000 3,080 27,020 16,340 3,500 4,830 24,670 The following information is also relevant: In July 2021 the rent on one of Mabel's stalls was increased significantly for the third time in three years so she decided not to renew the annual contract. She sold…arrow_forward
- A condensed income statement for Northeast Airlines and a partially completed vertical analysis are presented below. ts Required: 1. Complete the vertical analysis by computing each missing line item as a percentage of sales revenues. (Round your answers to the nearest whole percent.) еВook Print NORTHEAST AIRLINES Income Statement (summarized) For the Year Ended December 31 eferences (in millions of U.S. dollars) 2016 2015 Sales Revenues $ 20,925 100 $ 20,320 100 % Salaries and Wages Expense 6,823 33 6,408 Fuel, Oil, Repairs, and Maintenance 4,717 4,646 Other Operating Expenses 5,200 4,725 23 Other Expenses (Revenues) 238 1 652 Income before Income Tax Expense 3,947 19 3,889 19 Income Tax Expense Net Income 1,370 7 1,361 7 $ 2,577 % $ 2,528 % ä¸arrow_forwardA company’s comparative statements are given below. Please conduct the following analyses: c.    Calculate the three profitability ratios for year 2017 and show how ROE can be derived from the DuPont formula for this company. d.    What do the analyses tell you about the company’s financial performance?arrow_forwardGIVE THE COMPARATIVE INCOME STATEMENT HORIZONTAL AND VERTICAL ANALYSIS FROM THE FOLLOWING INCOME STATEMENT BELOW JOLLIBEE INCOME STATEMENT ITEM 2016 2017 2018 2019 2020 Sales/Revenue 113.81B 133.61B 161.17B 179.63B 129.31B Sales Growth - 17.40% 20.62% 11.45% -28.01% Cost of Goods Sold (COGS) incl. D&A - - 132.96B 150.88B 115.39B COGS Growth - - - 13.47% -23.52% COGS excluding D&A 89.27B 105.39B 121.08B 137.38B 100.82B Depreciation & Amortization Expense 4B 4.75B 11.89B 13.5B 14.57B Depreciation 3.93B 4.66B 11.73B 13.34B 14.32B Amortization of Intangibles 68.99M 78.95M 151.82M 145.42M 245.23M Gross Income 20.54B 23.48B 28.21B 28.75B 13.92B Gross Income Growth - 14.30% 20.12% 1.93% -51.57% Gross Profit Margin - - - - 10.77% SG&A Expense - - 17.64B 20.21B 20.42B SGA Growth - - -…arrow_forward
- a) Based on the information provided, calculate the following ratios for the years ended 31December 2021 and 2020.You should give the formula for each ratio, in addition to your calculation.I. Gross profit marginII. Operating profit marginIII. Return on equityIV. Current ratioV. Gearing b) By comparing the financial information for years ended 31 December 2021 and 2020, andreviewing your ratio calculations, comment on the profitability, liquidity, and long-termsolvency of Mabel’s business over the past year. You should use the other information givento suggest reasons for any changes identified. c)If an investor was interested in buying Mabel’s business and was presented with theseresults, what further advice would you give them?arrow_forward5. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Diusitech Inc. and make comments on its second-year performance as compared with its first-year performance. The following shows Diusitech Inc.'s income statement for the last two years. The company had assets of $4,700 million in the first year and $7,518 million in the second year. Common equity was equal to $2,500 million in the first year, and the company distributed 100% of its earnings out as dividends during the first and the second years. In addition, the firm did not issue new stock during either year. Diusitech Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 2,540 2,000 1,610 1,495 127 80 1,737 803 80 723 181 542 Net Sales Operating costs except depreciation and…arrow_forward- Please refer to the following Income Statement and Balance Sheet (see attached picture): Prepare a vertical analysis for both the income statement and balance sheet. Write a paragraph comparing the company’s performance with the industry average. Compute the following ratios and comment on what the results mean when evaluating the company:                Current ratio                Gross profit percentage ratio                Debt ratio                Profit margin ratioarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
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
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College