Fundamental Accounting Principles
Fundamental Accounting Principles
24th Edition
ISBN: 9781260158595
Author: Wild
Publisher: MCG
Question
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Chapter 17, Problem 1BPSB
To determine

Concept Introduction:

Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.

Requirement-1:

To Calculate:

Trend Percents for all components of both statements using 2013 as base year

Expert Solution
Check Mark

Answer to Problem 1BPSB

Trend Percents for all components of both statements using 2013 as base year are as follows:

    TRIPOLY COMPANY
    Comparative Income Statement Trend %
    For the Years Ended December 31
    $ thousands 2019201820172016201520142013
    Sales Trend %65.1%70.9%73.3%79.1%86.0%89.5%100.0%
    Cost of Goods Sold Trend %72.6%76.3%77.4%82.6%89.5%92.1%100.0%
    Gross profit Trend %59.2%66.7%70.0%76.3%83.3%87.5%100.0%
    Operating expenses Trend %56.0%69.3%74.7%84.0%93.3%96.0%100.0%
    Net income Trend %60.6%65.5%67.9%72.7%78.8%83.6%100.0%
    TRIPOLY COMPANY
    Comparative Year End Balance Sheet Trend %
    $ thousands 2019201820172016201520142013
    Assets:
    Cash Trend %64.7%67.6%76.5%79.4%88.2%91.2%100.0%
    Accounts Receivable, net Trend %81.3%85.0%87.5%90.0%93.8%96.3%100.0%
    Merchandise Inventory Trend %79.8%82.7%85.6%86.5%89.4%91.3%100.0%
    Other Current assets Trend %85.0%85.0%90.0%90.0%95.0%100.0%100.0%
    Long term Investments Trend %32.7%27.3%23.6%100.0%100.0%100.0%100.0%
    Plant Assets, net Trend %112.3%113.2%114.5%90.7%92.5%94.3%100.0%
    Total Assets Trend %88.5%89.6%91.5%90.2%92.7%94.6%100.0%
    Liabilities and Equity:
    Current Liabilities Trend %52.9%55.7%66.4%67.9%75.0%92.9%100.0%
    Long term liabilities Trend %35.4%46.2%54.6%56.9%74.6%82.3%100.0%
    Common Stock Trend %100.0%100.0%100.0%100.0%100.0%100.0%100.0%
    Other Paid in capital Trend %100.0%100.0%100.0%100.0%100.0%100.0%100.0%
    Retained earnings Trend %166.7%157.8%145.9%137.0%122.2%103.7%100.0%
    Total Liabilities and equity Trend %88.5%89.6%91.5%90.2%92.7%94.6%100.0%

Explanation of Solution

Trend Percents for all components of both statements using 2013 as base year are calculated as follows:

    TRIPOLY COMPANY
    Comparative Income Statement Trend %
    For the Years Ended December 31
    $ thousands 2019201820172016201520142013
    Sales 560610630680740770860
    Sales Trend %65.1%70.9%73.3%79.1%86.0%89.5%100.0%
    Cost of Goods Sold 276290294314340350380
    Cost of Goods Sold Trend %72.6%76.3%77.4%82.6%89.5%92.1%100.0%
    Gross profit 284320336366400420480
    Gross profit Trend %59.2%66.7%70.0%76.3%83.3%87.5%100.0%
    Operating expenses84104112126140144150
    Operating expenses Trend %56.0%69.3%74.7%84.0%93.3%96.0%100.0%
    Net income 200216224240260276330
    Net income Trend %60.6%65.5%67.9%72.7%78.8%83.6%100.0%
    TRIPOLY COMPANY
    Comparative Year End Balance Sheet Trend %
    $ thousands 2019201820172016201520142013
    Assets:
    Cash 44465254606268
    Cash Trend %64.7%67.6%76.5%79.4%88.2%91.2%100.0%
    Accounts Receivable, net130136140144150154160
    Accounts Receivable, net Trend %81.3%85.0%87.5%90.0%93.8%96.3%100.0%
    Merchandise Inventory 166172178180186190208
    Merchandise Inventory Trend %79.8%82.7%85.6%86.5%89.4%91.3%100.0%
    Other Current assets 34343636384040
    Other Current assets Trend %85.0%85.0%90.0%90.0%95.0%100.0%100.0%
    Long term Investments 363026110110110110
    Long term Investments Trend %32.7%27.3%23.6%100.0%100.0%100.0%100.0%
    Plant Assets, net 510514520412420428454
    Plant Assets, net Trend %112.3%113.2%114.5%90.7%92.5%94.3%100.0%
    Total Assets9209329529389649841040
    Total Assets Trend %88.5%89.6%91.5%90.2%92.7%94.6%100.0%
    Liabilities and Equity:
    Current Liabilities 148156186190210260280
    Current Liabilities Trend %52.9%55.7%66.4%67.9%75.0%92.9%100.0%
    Long term liabilities 92120142148194214260
    Long term liabilities Trend %35.4%46.2%54.6%56.9%74.6%82.3%100.0%
    Common Stock 160160160160160160160
    Common Stock Trend %100.0%100.0%100.0%100.0%100.0%100.0%100.0%
    Other Paid in capital 70707070707070
    Other Paid in capital Trend %100.0%100.0%100.0%100.0%100.0%100.0%100.0%
    Retained earnings450426394370330280270
    Retained earnings Trend %166.7%157.8%145.9%137.0%122.2%103.7%100.0%
    Total Liabilities and equity 9209329529389649841040
    Total Liabilities and equity Trend %88.5%89.6%91.5%90.2%92.7%94.6%100.0%
To determine

Concept Introduction:

Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.

Requirement-2:

To Indicate:

The major financial statement trends over the period

Expert Solution
Check Mark

Answer to Problem 1BPSB

  1. Sales has decreased over this period
  2. Net income has decreased over this period
  3. Total Assets have Decreased over this period

Hence the overall trend is decreasing.

Explanation of Solution

The explanation for each trend is shows as below:

    $ thousands 2019201820172016201520142013
    Sales Trend %65.1%70.9%73.3%79.1%86.0%89.5%100.0%
    $ thousands 2019201820172016201520142013
    Net income Trend %60.6%65.5%67.9%72.7%78.8%83.6%100.0%
    $ thousands 2019201820172016201520142013
    Total Assets Trend %88.5%89.6%91.5%90.2%92.7%94.6%100.0%

Hence,

  1. Sales has decreased over this period
  2. Net income has decreased over this period
  3. Total Assets have Decreased over this period

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Chapter 17 Solutions

Fundamental Accounting Principles

Ch. 17 - What ratios would you compute to evaluate...Ch. 17 - Why would a company’s return on total assets be...Ch. 17 - 13. Where on the income statement does a company...Ch. 17 - Prob. 14DQCh. 17 - Prob. 15DQCh. 17 - Prob. 16DQCh. 17 - Prob. 17DQCh. 17 - Prob. 1QSCh. 17 - QS 17-2 Standard of comparison C2 Identify which...Ch. 17 - Prob. 3QSCh. 17 - Trend percents P1 Use the following information to...Ch. 17 - QS17-5 Common-size analysis P2 Refer to the...Ch. 17 - QS 17-6 Computing current ratio and acid-test...Ch. 17 - QS 17-7 Computing accounts receivable turnover and...Ch. 17 - QS 17-8 Computing inventory turnover and days'...Ch. 17 - QS17-9 Computing total asset turnover P3 Dundee...Ch. 17 - Prob. 10QSCh. 17 - Prob. 11QSCh. 17 - QS 17-12 Computing price-earnings ratio and...Ch. 17 - Prob. 13QSCh. 17 - Prob. 14QSCh. 17 - QS 17-15A Identifying unusual and/or infrequent...Ch. 17 - Exercise 17-1 Building blocks of analysis Match...Ch. 17 - Prob. 2ECh. 17 - Prob. 3ECh. 17 - Prob. 4ECh. 17 - Prob. 5ECh. 17 - Prob. 6ECh. 17 - Prob. 7ECh. 17 - Prob. 8ECh. 17 - Prob. 9ECh. 17 - Prob. 10ECh. 17 - Exercise 17-11 Analyzing profitability P3 Q Refer...Ch. 17 - Prob. 12ECh. 17 - Prob. 13ECh. 17 - Prob. 14ECh. 17 - Prob. 15ECh. 17 - Exercise 17-16 Interpreting financial ratios A1 P3...Ch. 17 - Prob. 17ECh. 17 - Prob. 18ECh. 17 - Problem 17-1A Calculating and analyzing trend...Ch. 17 - Problem 17-2A Ratios, common-size statements, and...Ch. 17 - Problem 17-3A Transactions, working capital, and...Ch. 17 - Problem 17-4A Calculating financial statement...Ch. 17 - Prob. 5APSACh. 17 - Prob. 6APSACh. 17 - Prob. 1BPSBCh. 17 - Prob. 2BPSBCh. 17 - Prob. 3BPSBCh. 17 - Prob. 4BPSBCh. 17 - Prob. 5BPSBCh. 17 - Prob. 6BPSBCh. 17 - SP 17 Use the following selected data from...Ch. 17 - Prob. 1AACh. 17 - Prob. 2AACh. 17 - Prob. 3AACh. 17 - BTN 17-1 Refer to Apple’s financial statements in...Ch. 17 - Prob. 2BTNCh. 17 - Prob. 3BTNCh. 17 - Prob. 4BTNCh. 17 - Prob. 5BTNCh. 17 - Prob. 6BTN
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