Exercise 14-7 (Algo) Trend Percentages (LO14-1] Rotorua Products, Limited, of New Zealand markets agricultural products for the burgeoning Asian consumer market. The company's current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows: Sales Cash Accounts receivable, net Inventory Total current assets Current liabilities Required: Year 1 $ 4,623,950 $ 93,814 404,096 816,531 $ 1,314,441 $311,396 $ 4,864,740 Year 2 Year 3 $ 5,144,250 Year 4 $ 5,505,550 $100,070 433,357 $72,682 834,354 $ 100,818 416,859 802,013 $1,400,490 $340,119 $1,367,781 $325,601 504,341 998,237 $1,475,260 $319,405 Year 5 $5,741,650 $83,752 564,473 912,978 $1,561,203 $399,043 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 (l.e., 0.1234 should be entered as 12.3).) Sales Year 1 Year 2 Year 3 Year 4 Year 5 % % % % Current assets: Cash % % % % Accounts receivable, net % % % Inventory % % % % Total current assets % % % Current Sabilities % % % 16 Check m Sales McKenzie Sales, Limited Comparative Income Statement Cost of goods sold Gross margin Selling and administrative expenses: This Year $ 7,310,000 4,640,000 2,670,000 Last Year $ 5,555,600 3,507,500 2,048,100 1,382,000 1,080,500 702,500 609,000 Selling expenses Administrative expenses Total expenses Not operating income Interest expense Net income before taxes 2,084,500 585,500 106,000 $ 479,500 1,689,500 358,600 87,000 $ 271,600 Members of the company's board of directors are surprised to see that net income increased by only $207,900 when sales increased by $1,754,400. Required: 1. Express each year's income statement in common-size percentages. (Round your percentage answers to 1 decimal place (l.e., 0.1234 should be entered as 12.3).) This Year Last Year Sales Cost of goods sold % % Gross margin 0.0 % 0.0 % Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes i % % % 1% 0.0 % 0.0 % 0.0 % 0.0 % % % 0.0 % 0.0 % Exercise 14-2 (Algo) Financial Ratios for Assessing Liquidity [LO14-2] 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 600,000 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 company's common stock at the end of this year was $23. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Duildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities: Bonda payable: This Year Last Year $ 1,200 10,600 13,600 630 26,030 $ 1,390 7,400 12,400 590 21,700 9,500 9,500. 37,914 34,192 47,414 43,692 $ 73,444 $65,472 $20,100 $17,600 910 000 260 260 21,270 18,740 8,800 8.000 Total liabilition 30,070 27,540 Stockholders' equity Common stock 600 600 Additional paid-in capital 4,000 4,000 Total paid-in capital 4,600 4,600 Retained earnings 30,774 33,332 k 4,000 4,000 4,600 4,600 38,774 33,332 43,374 37,932 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Comparative Income Statement and Reconciliation Weller Corporation (dollars in thousands) $ 73,444 $ 65,472 This Year Last Year Sales Cost of goods sold $ 71,000 42,000 $ 64,000 42,000 Gross margin 29,000 22,000 Selling and administrative expenses: Selling expenses 11,100 11,000 Administrative expenses 7,200 6,400 Total selling and administrative expenses 18,300 17,400 Net operating income 10,700 4,600 Interest expense 880 880 Net income before taxes 9,820 3,720 Income taxes 3,928 1,488 5,892 2,232 450 240 Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings Required: Compute the following financial data and ratios for this year: 1. Working capital. (Enter your answer in thousands.) 2. Current ratio. (Round your answer to 2 decimal places.) 3. Acid-test ratio. (Round your answer to 2 decimal places.) 1. Working capital 2. Current ratio 3. Acid-test ratio 5,442 33,332 $ 38,774 1,992 31,340 $ 33,332