Loose-leaf for Fundamentals of Financial Accounting with Connect
5th Edition
ISBN: 9781259619007
Author: Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Chapter 13, Problem 13.5CP
1.
To determine
The Company which is more profitable between Company K and Company M and describe the ratio that is used to reach this decision.
2.
To determine
The Company which is more liquid between Company K and Company M and describe the ratio that is used to reach this decision.
3.
To determine
The Company which is more solvent between Company K and Company M and describe the ratio that is used to reach this decision.
4.
To determine
whether the conclusions made from the analyses in the above requirements with the value of the two companies are as suggested by price / earnings ratio and to provide an explanation if they are inconsistent.
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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.
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TannenhillCompany
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ElectronicsIndustryAverage
Sales
$2,740,000
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100
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Cost of goods sold
1,753,600
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69
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Gross profit
$986,400
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Selling expenses
$602,800
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18
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Administrative expenses
219,200
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Total operating expenses
$822,000
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Operating income
$164,400
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Other revenue
54,800
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$219,200
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Other expense
27,400
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Income before income tax
$191,800
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Income tax expense
82,200
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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…
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.
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.
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5.
In fiscal year 2018, Wal-Mart Stores (WMT) had revenue of $514.41 billion, gross profit of $129.10 billion, and net income of $6.67 billion. Costco Wholesale Corporation (COST) had revenue of $141.6 billion, gross profit of $18.42 billion, and net income of $3.13 billion.
a. Compare the gross margins for Walmart and Costco.
b. Compare the net profit margins for Walmart and Costco.
c. Which firm was more profitable in 2018?
a. Compare the gross margins for Walmart and Costco.
The gross margin for Walmart is enter your response here
%. (Round to two decimal places.)
The gross margin for Costco is enter your response here
%. (Round to two decimal places.)
Part 3
b. Compare the net profit margins for Walmart and Costco.
The net profit margin for Walmart is enter your response here
%. (Round to two decimal places.)
Part 4
The net profit margin for Costco is enter your response here
%. (Round to two decimal places.)
c. Which firm was more profitable in 2018? (Select from the…
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
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