Comprehensive Problem 2 - St of Cash Flows and Ratios Algo M. Schmidt Inc. M. Schmidt Inc. Income Statement Comparative Balance Sheets For years ended December 31, 2017 and 2018 December 31, 2018 and 2017 2018 2017 Change 2018 2017 Current assets: Sales (all on credit) $631,000 $599,000 Cash $76,300 $44,900 $31,400 Cost of goods sold (348.000) (285.000) Accounts receivable (net) 46,000 38,000 8,000 Gross margin 283,000 314,000 Inventory 50,000 48,000 2,000 Prepaid expenses 1,600 3,600 -2,000 Depreciation expense 38,000 53,000 Other current assets 2.290 3.500 1.210 Other operating 135.000 112.000 Total current assets 176,190 138,000 38,190 expenses Total operating expenses 173,000 165,000 Operating Income 110.000 149.000 Long-term Investments 89,000 62,000 27,000 314,000 263,000 51,000 (5,100) Plant assets (3,800) Less: accumulated depreciation 4,500 Total plant assets (80,400) Other Income (expenses) Interest expense Gain on sale of Investments Loss on sale of plant assets Total other Income (expenses) (53,000) 27,400 6,400 233.600 210.000 23.600 (3.600) (4,300) Total assets 498.790 410.000 88.790 (15,100) (3,600) Income before Income taxes Income taxes expense Net Income 107,700 145,400 (32.310) (43.620 $75,390 $101.780 Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities $31,300 2.400 2.700 36,400 $32,000 $-700 2,000 400 10,000 -7.300 44,000 -7,600 256.000 292.400 190,000 66.000 234,000 58,400 M. Schmidt Inc. Long term liabilities: Statement of Retained Earnings Notes Payable For the year ended December 31, 2018 Total liabilities 2018 2017 Ret earnings, Jan. 1 $38,000 $0 Stockholders' equity Add: net Income 75,390 101,780 Common stock, $5 par value Deduct: Dividends (45.000) (63,780) Additional pald-in capital Increase in retained 30,390 38,000 Retained earnings earnings Ret. earnings, Dec. 31 $68.390 $38.000 Total stockholders' equity Total liabilitles and stockholders' equity 110,000 28,000 68.390 206,390 $498,790 110,000 0 28,000 0 38.000 30.390 176,000 30,390 $410,000 $88.790 Other information: Shares of common stock outstanding Eamings per share Dividends per share Market price per share, common stock 22.000 $3.43 $2.05 $16 22.000 $4.63 $2.9 $13 Cash Flows Horiz Analysis Horiz Analysis Vertic Analysis Vertic Analysis from Oper Inc St Bal St Ratios Inc St Bal Sheet Requirement Prepare a vertical analysis on the partial balance sheet for 2017 and 2018. M. Schmidt Inc. Partial Balance Sheet (Vertical analysis) For the years ended December 31, 2018 and 2017 Liabilities 2018 2017 S Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Notes payable Total liabilities 3.100 X 2,400 2,700 5.17% XS 1.46% 0.83% X 7.46% 47.81% % 55.27% X 32,000 2,000 10.000 44,000 6.58% 1.52% X 3.80% X 3.80% 8.200 250.000 284,200 190.000 234.000 11.90% X 44.30% X > Stockholders' Equity Common stock, $5 par Additional paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 110,000 28,000 88,390 22.69% X 5.57% X 16.77% X 44.73% 100.00% IS 110.000 28,000 38,000 176,000 410,000 00 27.85% X 7.09% X 8.86% X 43.80% X 100.00% 206,390 470.590 IS Vertic Analysis Inc St Ratios > *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. Cash Flows from Oper Horiz Analysis Horiz Analysis Vertic Analysis Vertic Analysis Inc St Bal St Inc St Bal Sheet Ratios Choose Numerator Choose Denominator Enter Numerator Value Enter Denominator Value $ 176.190 S 138,000 X Ratio Current ratio Current assets Current liabilities OO Acid-test ratio x X Income before interest expense and income taxes Current liabilities 138,000 X Inventory turnover Average inventory x x x x Days' sales in inventory x Average inventory Cost of goods sold ol XX IS (348,000) Accounts receivable turnover Net sales S 75.390 X >> XX Accounts receivable, net Days' sales in receivables Accounts receivable, net x X >> x x Net sales S 75,300 X Total asset turnover Net sales S 75.390 X xo Total assets x x x x Debt-to-equity ratio Cash + Short-term investments + Current receivables X Average common stockholders' equity x x Profit margin X X Net sales - Cost of goods sold Net sales XX Return on total assets x Income before interest expense and income taxes Average total assets x x Return on common stockholders' equity Net income - Preferred dividends % >> x x Average common stockholders' equity Price/earnings ratio (P/E) Market price per common share Earnings per share SIS $ 110,000.00 S 2,800.00 X Dividend yield x Annual cash dividends per share Market price per common share olo