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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Use the following information for P4-17 and P4-18:

The Hershey Company is one of the world’s leading producers of chocolates, candies, and confections. It sells chocolates and candies, mints and gums, baking ingredients, toppings, and beverages. Hershey’s consolidated balance sheets for 20X2 and 20X3 follow.

Chapter 4, Problem 17P, Use the following information for P4-17 and P4-18: The Hershey Company is one of the worlds leading

Common-Size and Rate of Change Analyses: Hershey Refer to the information for Hershey above.

Required:

Compute the common-size balance sheet for 20X3 and the rate of change balance sheet for 20X3. Which two asset accounts and which two liability and share-holders equity accounts are the largest relative to total assets in 20X3? Which two asset account and which two liability and share-holders equity accounts grew at the fastest rates 20X3? (Note: You may find it helpful to enter the data into an Excel spreadsheet for these computations.)

To determine

Calculate the common-size balance sheet and the rate of change balance sheet, state the two asset accounts, two liability and shareholders’ equity accounts that grew faster during 20X3.

Explanation

Common-size analysis:

In common size analysis, the amount of each item is recorded in a statement as a percentage of certain designated totals and it is more helpful for comparing statements related to two or more periods.

Common-size balance sheet and rate of change balance sheet is prepared as follows:

Company H
Consolidated Balance Sheet
Assets20X2 (a)20X3 (b)

20X3

(b)Total assets×100

20X3 (b)(a)(a)
Current Assets:    
Cash and Equivalents$728.3$118.520.9%53.6%
Receivables$461.4$477.98.9%3.6%
Inventories$633.3$659.512.3%4.1%
Deferred Income Taxes$122.2$52.51.0%57.0%
Prepaid Expenses and Other Assets$168.3$178.93.3%6.3%
Total Current Assets$2,113.5$2,487.346.4%17.7%
Property, Plant and Equipment, Net$1,674.1$1,805.333.7%7.8%
Goodwill$588.0$576.610.8%-1.9%
Other Intangible Assets, net$214.7$195.23.6%-9.1%
Other Assets$164.5$293.05.5%78.1%
Total Assets$4,754.8$5,357.5100.0%12.7%
Liabilities and Shareholders’ Equity    
Current Liabilities:    
Accounts Payable$442.0$461

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