COMPREHENSIVE PROBLEMS Use the following 2019 financial statements for Eactreme Edge to complete problems 6-I to 6-3 Income Statements ( in thousands) For the Years Ended December 31 2019 2018 2017 $1,340$1,200 $1,000 Sales revenues Cost of goods sold Gross profit Depreciation expense Amortization expense Other operating expenses Operating income Interest (financing) expense Pretax income Income tax expense (40%) Net income 685 660 540 120 400 100 200 5 368 82 345 70 255 40 50 60 30 30 S 36 $ 18 154Pg. 153 | Problem G-1 Vertiely common-sixe xtrene Kige inoestaterment.adace sheet for 2019 by comleing the allowing tablea. Identify one line item reported on both the 2019 income statement and balance sheet that differs from previ- ous years and discuss its financial implications. Income Statements 2019 2018 2017 1000% 600% 40.0% Sales revenme Less: Cost of goods sold Groes proffit Operating expenses: 100.0% 55.0% 46,0% 0% 0.4% Other operaring expenses Initerest (linancing) expernse Iricorne tax c 28,8% 25 5% 40% 1.0% 3.0% 1 2% 1 896 Irncme Trom opera.ins 5.8% 0.8% 5.0 2.0% 3.0% Pretax income 404% Net income Balance Sheeta Assets 12/31/19 Cash Accounts receivable, net Inventory 1231/1812A1M7 4.2% 12.7% 28,8 28,0% 40.8% 1.3% 10.1% Tatal currert.asses Property, ant and Kqui 70.4% Equipment (at cost) Less: accuated depreciation 76.7% 47.9% Equipment, net of accumulated depreciatson itangible Assels Customer database a, cost) 56.5% 3.2% 3,5% Customer databsse, nec of accumulated smortization Total Assets ahilities Accournts payablo Accrued iabilities 18.3% 22.5% 45% 27.0% 14.1% Total current liabillties Long-term notes pggable 20.8% 12.6% 13.4% | Total Liahilities Stiarchokiers' Equity Common stock, $1 pa Acdaitional aid in capital on common stoxk 6.8% i4.2% 60.5 5.6% 50,7% Ttalnt.ributed capital Retaincd carrunps Total Sharcholders'Equity 66,0% 100.0% 58.920 100.0% Total Liabilities and Shareholders Eq 156 Pg. 155 Problem 6-2 Horiontaily common-size Extreme Edges income statement and balance sheet for 2019 by completing the follow- irng tahles, Ideritify one line item reportedn both the 2019 income staterient and balance sheet that differs frorm previous years arnd discuss its finaricial inplications. 2019 2018 120.0% 110.0% 2017 100.0 110.0% Sales reveaue Less: Cost of goods sold Gross prolit Operating expenscs Depreciation expense Armartization experse Other operating expenses 120.0% ci 100.0% ncame fron operaios 175.0% 100.0% , 200.0% 201.0% Pretax income 100.0% Income tax expense (40%) Net income 100.0% Balance Sheets Asscts 1231/19 12/31/18 1231/17 Cash Accournts roccivable, net Inventory 300.0%| 88.9%| 134.1%| 137.2%| 100.0% 100.0% 100.0% 100.0% Total curent assets Proporty, Plant and Equipment: Dquipment. (at cost) Leas 120.0% | 220.0% 1 96.0%| 1.0% 100.0% 100.0% 10 Equipmont, net of accumulated depreciation. Iritangible Asset: 100.0% 200.0% 1 T5.0% | 111.7%| 100.0% 100.0% 100.0% 100.0% Customer database (at cost) Customer database, net of accumulated amortation Total Assets Liabilitics 101.0% 100.0% 100.0% 100.0% 100.0% Accounts payable Accrued liabilities 90.6% 2.5 86.9%| 100.0% | 90.8%| Total curet liabilities Long-term notes payable Total Liabilities Starchoiers' Equity Common stock, $1 par Additional peid-T-capital on common stock 125.0% | UBA 120.0% 206.7% | 1203 | 111.7%| 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Total coributed capital Retained eanings Total Shareholders' Equity Total Liabilities and Sharcholders Equity 1 Pg. 156 157 158 Ch r6 Financial Statement Analys s l Problem 6-3 Calculate the 2010 inancial messures for Extreme Edge by completing the olling table. Financial Measure 2019 2018 2017 Return on equity Retura on asscts Operating proft margin Asset uurnover Working capital Working apita (urrert.) ratio Inventory curnover Days in inventory Accounts reccivable turnOVeT 8896 1.41 98 6233 Accounts payable tumiover Days in accounts payable Net cash conversion cycle Debt-to- etyrao Esminas coverage 158 Pg. 157 COMPREHENSIVE PROBLEMS Use the following 2019 financial statements for Eactreme Edge to complete problems 6-I to 6-3 Income Statements ( in thousands) For the Years Ended December 31 2019 2018 2017 $1,340$1,200 $1,000 Sales revenues Cost of goods sold Gross profit Depreciation expense Amortization expense Other operating expenses Operating income Interest (financing) expense Pretax income Income tax expense (40%) Net income 685 660 540 120 400 100 200 5 368 82 345 70 255 40 50 60 30 30 S 36 $ 18 154Pg. 153 | Problem G-1 Vertiely common-sixe xtrene Kige inoestaterment.adace sheet for 2019 by comleing the allowing tablea. Identify one line item reported on both the 2019 income statement and balance sheet that differs from previ- ous years and discuss its financial implications. Income Statements 2019 2018 2017 1000% 600% 40.0% Sales revenme Less: Cost of goods sold Groes proffit Operating expenses: 100.0% 55.0% 46,0% 0% 0.4% Other operaring expenses Initerest (linancing) expernse Iricorne tax c 28,8% 25 5% 40% 1.0% 3.0% 1 2% 1 896 Irncme Trom opera.ins 5.8% 0.8% 5.0 2.0% 3.0% Pretax income 404% Net income Balance Sheeta Assets 12/31/19 Cash Accounts receivable, net Inventory 1231/1812A1M7 4.2% 12.7% 28,8 28,0% 40.8% 1.3% 10.1% Tatal currert.asses Property, ant and Kqui 70.4% Equipment (at cost) Less: accuated depreciation 76.7% 47.9% Equipment, net of accumulated depreciatson itangible Assels Customer database a, cost) 56.5% 3.2% 3,5% Customer databsse, nec of accumulated smortization Total Assets ahilities Accournts payablo Accrued iabilities 18.3% 22.5% 45% 27.0% 14.1% Total current liabillties Long-term notes pggable 20.8% 12.6% 13.4% | Total Liahilities Stiarchokiers' Equity Common stock, $1 pa Acdaitional aid in capital on common stoxk 6.8% i4.2% 60.5 5.6% 50,7% Ttalnt.ributed capital Retaincd carrunps Total Sharcholders'Equity 66,0% 100.0% 58.920 100.0% Total Liabilities and Shareholders Eq 156 Pg. 155 Problem 6-2 Horiontaily common-size Extreme Edges income statement and balance sheet for 2019 by completing the follow- irng tahles, Ideritify one line item reportedn both the 2019 income staterient and balance sheet that differs frorm previous years arnd discuss its finaricial inplications. 2019 2018 120.0% 110.0% 2017 100.0 110.0% Sales reveaue Less: Cost of goods sold Gross prolit Operating expenscs Depreciation expense Armartization experse Other operating expenses 120.0% ci 100.0% ncame fron operaios 175.0% 100.0% , 200.0% 201.0% Pretax income 100.0% Income tax expense (40%) Net income 100.0% Balance Sheets Asscts 1231/19 12/31/18 1231/17 Cash Accournts roccivable, net Inventory 300.0%| 88.9%| 134.1%| 137.2%| 100.0% 100.0% 100.0% 100.0% Total curent assets Proporty, Plant and Equipment: Dquipment. (at cost) Leas 120.0% | 220.0% 1 96.0%| 1.0% 100.0% 100.0% 10 Equipmont, net of accumulated depreciation. Iritangible Asset: 100.0% 200.0% 1 T5.0% | 111.7%| 100.0% 100.0% 100.0% 100.0% Customer database (at cost) Customer database, net of accumulated amortation Total Assets Liabilitics 101.0% 100.0% 100.0% 100.0% 100.0% Accounts payable Accrued liabilities 90.6% 2.5 86.9%| 100.0% | 90.8%| Total curet liabilities Long-term notes payable Total Liabilities Starchoiers' Equity Common stock, $1 par Additional peid-T-capital on common stock 125.0% | UBA 120.0% 206.7% | 1203 | 111.7%| 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Total coributed capital Retained eanings Total Shareholders' Equity Total Liabilities and Sharcholders Equity 1 Pg. 156 157 158 Ch r6 Financial Statement Analys s l Problem 6-3 Calculate the 2010 inancial messures for Extreme Edge by completing the olling table. Financial Measure 2019 2018 2017 Return on equity Retura on asscts Operating proft margin Asset uurnover Working capital Working apita (urrert.) ratio Inventory curnover Days in inventory Accounts reccivable turnOVeT 8896 1.41 98 6233 Accounts payable tumiover Days in accounts payable Net cash conversion cycle Debt-to- etyrao Esminas coverage 158 Pg. 157