Financial and Managerial Accounting - With CengageNow
14th Edition
ISBN: 9781337577809
Author: WARREN
Publisher: CENGAGE L
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Chapter 3, Problem 2ADM
A.
To determine
Vertical analysis:
Vertical analysis is the method of financial statement analysis, and it is useful in evaluating a company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing the each item on a financial statement with a total amount from the same statement. In the vertical analysis, the financial statements are analyzed in the following manner:
- In vertical analysis of a
balance sheet , each asset item is stated as a percent of the total asset, and each liability and owner’s equity item is stated as a percent of total liabilities and owner’s equity. - In vertical analysis of an income statement, each item of revenue and expense is stated as a percent of total revenues of the business.
To prepare: The vertical analysis of CM Incorporation’s balance sheet.
B.
To determine
To interpret: The vertical analysis with respect to the changes in the percent assets, liability, and
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Suppose that you are given the following data for Niles Company :
Note: The data and calculations are based on a 365-day year.
Cash and equivalents
Fixed assets
Sales
Net income
Current liabilities
Current ratio
DSO
ROE
The current ratio is equal to
assets value of
Return on equity (ROE) is to
approximately
$225,000
$650,000
$2,500,000
$112,500
$240,000
2.5
18.25
12.00%
The days sales outstanding (DSO) ratio is equal to
accounts receivable balance of
Plugging in the relevant values for the current ratio and current liabilities, and then solving yields a current
. Adding fixed assets to current assets yields a value of total assets of
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Cash to Monthly Cash Expenses Ratio
Amicus Therapeutics, Inc., is a biopharmaceutical company that develops drugs for the treatment of various diseases, including Parkinson's
disease. Amicus Therapeutics reported the following financial data (in thousands) for three recent years:
For Years Ended December 31
Year 1
Year 3
Year 2
Cash and cash equivalents
$69,485
$24,074
$43,640
Net cash flows from operations
(100,139)
(51,669)
(45,794)
a. Determine the monthly cash expenses for Year 3, Year 2, and Year 1 (in thousands). Round to one decimal place.
Year 3:
per month
Year 2:
per month
per month
Year 1:
b. Determine the ratio of cash to monthly cash expenses for Year 3, Year 2, and Year 1 as of December 31. Round to one decimal place.
months
Year 3:
months
Year 2:
months
Year 1:
Problem 1
LAKELAND Company has Sales of $2,250,000. The cost of goods sold for the year were
65% of Sales and Company's year-end balance sheets is shown below :
Assets
LAKELAND Company
Balance Sheet 2021
Cash
Accounts receivable
Marketable securities
Inventories
Plant and Equipment
Total Assets (100%)... $1,000,000
For the year ended December 31, 2021, assume all sales are on credit, and 360 days per year.
Required to Compute the following Ratio:
5%
27%
8%
25%
35%
Required:
1. Current ratio.
2. Quick ratio.
3. Debt-to-total assets ratio.
4. Assets turnover.
5. Inventory turnover.
Liabilities and Stockholders' Equity
Accounts payable
Accrued taxes
=
23%
8%
12%
12%
20%
25%
Bond payable (long term)
Common Stock
Paid- in- Capital
Retained Earning
Total Liabilities and SOE (100%)... $1,000,000
Problem 2
Assume that you need to borrow $180,000 from local bank to invested on the department
store and consider a 2 years loan with Semiannual payment with the interest rate 8% per
year.
a. What is…
Chapter 3 Solutions
Financial and Managerial Accounting - With CengageNow
Ch. 3 - How are revenues and expenses reported on the...Ch. 3 - Is the matching concept related to (A) the cash...Ch. 3 - Why are adjusting entries needed at the end of an...Ch. 3 - What is the difference between adjusting entries...Ch. 3 - Identify the four different categories of...Ch. 3 - If the effect of the debit portion of an adjusting...Ch. 3 - If the effect of the credit portion of an...Ch. 3 - Does every adjusting entry have an effect on...Ch. 3 - Prob. 9DQCh. 3 - (A) Explain the purpose of the two accounts:...
Ch. 3 - Account requiring adjustment Indicate with a Yes...Ch. 3 - Type of adjustment Classify the following items as...Ch. 3 - Adjustment for accrued revenues At the end of the...Ch. 3 - Adjustment for accrued expense Prospect Realty Co....Ch. 3 - Adjustment for unearned revenue On June 1, 2018,...Ch. 3 - Adjustment for prepaid expense The prepaid...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Effect of omitting adjustments For the year ending...Ch. 3 - Effect of errors on adjusted trial balance For...Ch. 3 - Classifying types of adjustments Classify the...Ch. 3 - Classifying adjusting entries The following...Ch. 3 - Adjusting entry for accrued fees At the end of the...Ch. 3 - Effect on omitting adjusting entry The adjusting...Ch. 3 - Adjusting entries for accrued salaries Garcia...Ch. 3 - Determining wages paid The wages payable and wages...Ch. 3 - Effect of omitting adjusting entry Accrued...Ch. 3 - Effect of omitting adjusting entry When preparing...Ch. 3 - Adjusting entries for unearned fees The balance in...Ch. 3 - Effect of omitting adjusting entry At the end of...Ch. 3 - Adjusting entry for supplies The balance in the...Ch. 3 - Determining supplies purchased The supplies and...Ch. 3 - Effect of omitting adjusting entry At March 31,...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for unearned and accrued fees...Ch. 3 - Prob. 3.17EXCh. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Determining fixed assets book value The balance in...Ch. 3 - Prob. 3.20EXCh. 3 - Prob. 3.21EXCh. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements The...Ch. 3 - Effects of errors on financial statements If the...Ch. 3 - Prob. 3.25EXCh. 3 - Adjusting entries from trial balances The...Ch. 3 - Prob. 3.27EXCh. 3 - Adjusting entries On March 31, the following data...Ch. 3 - Adjusting entries Selected account balances before...Ch. 3 - Adjusting entries Reliable Repairs Service, an...Ch. 3 - Adjusting entries Good Note Company specializes in...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Adjusting entries and errors At the end of April,...Ch. 3 - Adjusting entries On May 31, the following data...Ch. 3 - Adjusting entries Selected account balances before...Ch. 3 - Prob. 3.3BPRCh. 3 - Adjusting entries The Signage Company specializes...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Prob. 3.6BPRCh. 3 - The unadjusted trial balance that you prepared for...Ch. 3 - Prob. 1ADMCh. 3 - Prob. 2ADMCh. 3 - Nike: Vertical analysis The following data are...Ch. 3 - ATT and Verizon: Vertical analysis The following...Ch. 3 - Ethics in Action Chris P. Bacon is the chief...Ch. 3 - Prob. 3TIF
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