Question
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:
McKenzie Sales, Ltd. Comparative Income Statement | ||||||
This Year | Last Year | |||||
Sales | $ | 7,360,000 | $ | 5,593,600 | ||
Cost of goods sold | 4,750,000 | 3,507,000 | ||||
Gross margin | 2,610,000 | 2,086,600 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 1,371,000 | 1,076,000 | ||||
Administrative expenses | 709,500 | 614,000 | ||||
Total expenses | 2,080,500 | 1,690,000 | ||||
Net operating income | 529,500 | 396,600 | ||||
Interest expense | 102,000 | 89,000 | ||||
Net income before taxes | $ | 427,500 | $ | 307,600 | ||
Members of the companys board of directors are surprised to see that net income increased by only $119,900 when sales increased by $1,766,400.
Required:
1. Express each year's income statement in common-size percentages. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
.
Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 700,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the companys common stock at the end of this year was $26. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||||||
This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 1,210 | $ | 1,360 | ||
Accounts receivable, net | 10,700 | 8,000 | ||||
Inventory | 13,000 | 11,000 | ||||
Prepaid expenses | 770 | 630 | ||||
Total current assets | 25,680 | 20,990 | ||||
Property and equipment: | ||||||
Land | 9,700 | 9,700 | ||||
Buildings and equipment, net | 42,196 | 37,083 | ||||
Total property and equipment | 51,896 | 46,783 | ||||
Total assets | $ | 77,576 | $ | 67,773 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 19,000 | $ | 19,000 | ||
Accrued liabilities | 1,020 | 700 | ||||
Notes payable, short term | 290 | 290 | ||||
Total current liabilities | 20,310 | 19,990 | ||||
Long-term liabilities: | ||||||
Bonds payable | 9,200 | 9,200 | ||||
Total liabilities | 29,510 | 29,190 | ||||
Stockholders' equity: | ||||||
Common stock | 700 | 700 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,700 | 4,700 | ||||
Retained earnings | 43,366 | 33,883 | ||||
Total stockholders' equity | 48,066 | 38,583 | ||||
Total liabilities and stockholders' equity | $ | 77,576 | $ | 67,773 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 71,000 | $ | 64,000 | ||
Cost of goods sold | 35,000 | 40,000 | ||||
Gross margin | 36,000 | 24,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 11,300 | 10,800 | ||||
Administrative expenses | 7,100 | 6,500 | ||||
Total selling and administrative expenses | 18,400 | 17,300 | ||||
Net operating income | 17,600 | 6,700 | ||||
Interest expense | 920 | 920 | ||||
Net income before taxes | 16,680 | 5,780 | ||||
Income taxes | 6,672 | 2,312 | ||||
Net income | 10,008 | 3,468 | ||||
Dividends to common stockholders | 525 | 525 | ||||
Net income added to retained earnings | 9,483 | 2,943 | ||||
Beginning retained earnings | 33,883 | 30,940 | ||||
Ending retained earnings | $ | 43,366 | $ | 33,883 | ||
Required:
Compute the following financial data and ratios for this year:
1. Working capital. (Enter answer in thousands.)
2. Current ratio. (Round your answer to 2 decimal places.)
3. Acid-test ratio. (Round your answer to 2 decimal places.)
Garrison 16e Rechecks 2017-09-30, 2017-12-04
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started