Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Question
Chapter 2, Problem 2MAD
(a)
To determine
Prepare a horizontal analysis of the income statements.
(b)
To determine
Interpret the results of the horizontal analysis.
c.
To determine
Explain the reasons for the decrease in the revenues and operating income in Year 2.
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Chipotle Mexican Grill, Inc. (CMG) is a quick-service restaurant providing a focused menu of burritos, tacos, and salads. Chipotle's income statements through operating income for two recent years are as follows (in thousands):
a. Prepare a vertical analysis of the two income statements. Round percentages to one deci mal place.b. Interpret the vertical analysis.
Chipotle Mexican Grill, Inc. (CMG) is a quick-service restaurant providing a focused menu of burritos, tacos, and salads. Chipotle's income statements for the end of two recent years are as follows:
a. Prepare a horizontal analysts of the two income statements. Round percentages to one decimal place.b. Interpret the horizontal analysis.c. Can you think of a reason why Chipotle's revenues and operating income may have decreased so significantly in Year 2?
Instructions for Case 1 - Pickwick Restaurants:
Calculate each ratio listed above and provide a one-word comment on whether the ratio measure is better, worse or the same as last year.
Last year's numbers are provided below.
Organize the ratios into four broad categories and then briefly comment (140 characters per category) on your analysis of Pickwick Restaurants' 2013 Financial Statements. For example, where is the business performance trending favorably and where might Jaclyn need to devote some attention?
You do not need to answer the "explain the meaning and significance of each ratio" part of the question.
Last year:
Current 1.25 times
Quick 0.8 times
Debt to total assets 65.8%
Debt to equity 1.92 times
Times interest earned 3.2 times
Fixed charges coverage 2.0 times
Average collection period 76 days
Inventory turnover 2.5 times
Capital assets turnover 2.36 times
Total assets turnover 1.15 times
Profit margin 8.0%
Return on revenue 4.0%
Return on total assets 5.5%
Return on…
Chapter 2 Solutions
Financial And Managerial Accounting
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