Question
21. Taylor Company reported the following information for the current year: Account Current year Percentage Prior year Net sales revenue $367,200 100% $300,000 COGS $220,320
21. Taylor Company reported the following information for the current year:
Account | Current year | Percentage | Prior year |
Net sales revenue | $367,200 | 100% | $300,000 |
COGS | $220,320 | ? | $240,000 |
Gross Profit | $146,880 | 40.00% | $60,000 |
Selling/General Exp. | $69,768 | 19.00% | $12,000 |
Net income before tax | $77,112 | ? | $48,000 |
Income Tax | $7,344 | 2.00% | $3,000 |
Net Income | $69,768 | ? | $45,000 |
What would a vertical analysis report with respect to current year income tax expense?
A) A decrease of $24,768
B) A decrease of 144.80% from prior to current year
C) Income tax expense is 2.00% of net sales revenue
D) A decrease of $4,344
22. Comparing the horizontal analysis of McDonald's financial statements to the horizontal analysis of Burger King's financial statements in percentages of increase or decrease from 2010 to 2011 would be
A) vertical analysis.
B) benchmarking.
C) ratio analysis.
D) horizontal analysis.
23. Presented are the income statements of Ritman and Taylor Publications companies for the current year:
| Ritman |
| Taylor |
|
Net sales revenue | $487,000 | 100.00% | $500,000 | 100.00% |
COGS | 400,000 | 82.14% | 395,000 | 79.00% |
Gross Profit | 87,000 | 17.86% | 105,000 | 21.00% |
Selling/Gen Expenses | 30,000 | 6.16% | 50,000 | 10.00% |
Income from operations | 57,000 | 11.70% | 55,000 | 11.00% |
Income tax expense | 17,100 | 3.51% | 16,500 | 3.30% |
Net Income | $39,900 | 8.19% | $38,500 | 7.70% |
Which company has the better relationship percentage-wise between selling and general expenses compared to net sales revenue?
A) Impossible to determine
B) Both have the same relationship
C) Ritman
D) Taylor
24. Which of the following is considered a strong current ratio?
A) 0.5
B) 1.0
C) -1.0
D) 2.0
| Proposal X | Proposal Y |
Investment | $ 850,000 | $ 468,000 |
Useful life | 8 years | 8 years |
Estimated annual net cash inflows for 8 years | $ 125,000 | $ 78,000 |
Residual value | $ 40,000 | $ - |
Depreciation method | Straight-line | Straight-line |
Required rate of return | 14% | 10% |
13. How long is the payback period for Proposal X?
A) 10.90 years
B) 6.00 years
C) 6.80 years
D) 21.25 years
14. What is the accounting rate of return for Proposal X?
A) 2.88 %
B) 14.71 %
C) 26.62 %
D) 2.79%
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