a.
Vertical Analysis:
In vertical analysis, every line item is represented as a percentage of a base amount which can be either total assets, total liabilities, total equities, etc.
Requirement 1
To compute:
Cash as a percentage of total current assets, total current liabilities, total
b.
Horizontal Analysis:
In a horizontal analysis, a single line item is represented and compared as a percentage change from one base year to the subsequent years.
Requirement 2
To compute:
Percentage change between the beginning and ending cash balances for the current year.
c.
Days’ sales uncollected:
This ratio defines how fast a company converts its receivable into known amounts of cash. The lesser the ratio is, the better it is for the company as it will prove that the company employs an efficient system of cash collection from customers.
Requirement 3
To compute:
The days’ sales uncollected for both the current and prior year.
d.
Changes in Days’ sales uncollected:
The changes in the ratio of days’ sales uncollected will greatly impact the liquidity problem of the entity. If it is reduced, the company is considered to be efficiently managing its cash collection mechanism or in case, it is increased, the otherwise will follow.
Requirement 4
Whether S’s receivables collection is showing a favorable or unfavorable change.
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FINANCIAL AND MANAGERIAL ACC VOL 2 W/CON
- Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: 1. Calculate the return on sales. (Note: Round the percent to two decimal places.) 2. CONCEPTUAL CONNECTION Briefly explain the meaning of the return on sales ratio, and comment on whether Juroes return on sales ratio appears appropriate.arrow_forwardThe following data (in millions) are taken from recent financial statements of Nike Inc.: a. Determine the amount of change (in millions) and percent of change in net income for Year 2. Round to one decimal place. b. Determine the percentage relationship between net income and net sales (net income divided by net sales) for Year 2 and Year 1. Round to one decimal place. c. What conclusions can you draw from your analysis?arrow_forwardFinancial statement analysis The financial statements for Nike, Inc., are presented in Appendix D at the end of the text. Use the following additional information (in thousands): Instructions 1. Determine the following measures for the fiscal years ended May 31, 2016, and May 31, 2015. Round ratios and percentages to one decimal place. a. Working capital b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days sales in receivables f. Inventory turnover g. Number of days sales in inventory h. Ratio of liabilities to stockholders equity i. Asset turnover j. Return on total assets. k. Return on common stockholders equity l. Price-earnings ratio, assuming that the market price was 54.90 per share on May 29, 2016, and 52.81 per share on May 30, 2015 m. Percentage relationship of net income to sales 2. What conclusions can be drawn from these analyses?arrow_forward
- Formulating Financial Statements from Raw Data Following is selected financial information from Greenwood Industries, for its fiscal year ended ($ millions). Cash and cash equivalents, end of year Net cash from operations Net sales Stockholders' equity, end of year Cost of goods sold Net cash from financing Total liabilities, end of year Other expenses, including income taxes Noncash assets, end of year Net cash from investing Net income Effect of exchange rate changes on cash Cash and cash equivalents, beginning of year Net income Cost of goods sold REQUIRED a. Prepare an income statement, balance sheet, and statement of cash flows for Greenwood Industries. Note: Do not use negative signs with your answers in the Income Statement. Net cash flows from operations $2,516.7 5,514.3 26,439.9 14,411.2 Greenwood Industries Income Statement ($ millions) # 17,245.1 (2,912.3) 31,798.9 5,878.7 43,693.4 (729.3) 3,316.2 (31.1) 675.0 # # ♦ + ♦ + $ $ $ 0 0 0 0 0 Greenwood Industries Balance Sheet (5…arrow_forwardRequired: 1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) Sales Current assets: Cash Accounts receivable, net Inventory Total current assets Current liabilities Year 1 % % % % % % Year 2 % % % % % % Year 3 % % % % % % Year 4 % % % % % Year 5 % % % % %arrow_forwardAfter reviewing the information, calculate the following ratios for Nestlé for 2021:1) Inventory turnover2) Profit margin3) Return on assets4) Free cash flowRound all answers to two decimal places.arrow_forward
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- Assume that a company had an accounts payable balance of $50 million at the end of the prior year and a balance in accounts payable of $57 million at the end of the current year. Inventory at the end of the current year is $130 million and Cost of Goods Sold for the current year is $544 million. What is accounts payable turnover for the current year? Round your answer to the nearest whole number (i.e., no decimal places).arrow_forwardAfter reviewing the information, calculate the following ratios for 2021. 1) Inventory turnover2) Profit margin3) Return on assets4) Free cash flow Round all answers to two decimal places.arrow_forwardFINANCIAL RATIO: Requirement: Compute for the following financial ratios for the year 2021 (round-off answers to two decimal places) f. Accounts receivable turnover (assume all sales are on credit) g. Days of receivable (use 365 days) h. Debt ratio i. Equity ratio j. Debt-to-equity ratio k. Gross profit ratio 1. Net profit ratio m. Return on assets n. Return on equityarrow_forward
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