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: Year 2 $ 4,798,690 Sales Cash Accounts receivable, net Inventory Total current assets Year 1 $ 4,516,090 $ 95,842 410, 303 816,833 $ 1,322,978 $ 90,776 416,687 866,258 $ 1,373,721 Year 3 $ 5,117,430 $ 92,139 444,993 824, 459 $ 1,361,591 Year 4 $ 5,560,660 $ 85, 804 515,878 897,971 $ 1,499,653 Year 5 $ 5,736, 470 $ 78,615 561,730 909,845 $ 1,550,190 $ 397,539 Current liabilities $ 303,195 $ 335, 343 $ 337,773 $ 323, 451 Required: 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 (i.e., 0.1234 should be entered as 12.3).) Year 1 Year 2 Year 3 Year 4 Year 5 Sales % % % % % Current assets: Cash % % % % % % % % % % Accounts receivable, net Inventory Total current assets % % % % % % % % % % Current liabilities % % % % % A comparative income statement is given below for Mckenzie Sales, Limited, of Toronto: Last Year $ 5,601,200 3,506,000 2,095,200 McKenzie Sales, Limited Comparative Income Statement This Year Sales $ 7,370,000 Cost of goods sold 4,770,000 Gross margin 2,600,000 Selling and administrative expenses: Selling expenses 1,392,000 Administrative expenses 707,000 Total expenses 2,099,000 Net operating income 501,000 Interest expense 101,000 Net income before taxes $ 400,000 1,073,500 609,000 1,682,500 412,700 85,000 $ 327,700 Members of the company's board of directors are surprised to see that net income increased by only $72,300 when sales increased by $1,768,800. 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).) This Year Last Year % % % % % % % Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes % % % % % % % % % % % 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 company's common stock at the end of this year was $25. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,160 10,700 12,900 720 25,480 $ 1,360 8,400 11,900 640 22,300 11,000 41, 251 52, 251 $ 77,731 11,000 36,098 47,098 $ 69,398 Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings 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: Bonds payable Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 20,300 930 250 21,480 $ 18,800 880 250 19,930 8,200 29, 680 8,200 28,130 700 4,000 4,700 43,351 48,051 700 4,000 4,700 36,568 41,268 $ 69,398 $ 77,731 Last Year $ 65,000 37,000 28,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $ 74,000 Cost of goods sold 43,000 Gross margin 31,000 Selling and administrative expenses: Selling expenses 11,400 Administrative expenses 6,600 Total selling and administrative expenses 18,000 Net operating income 13,000 Interest expense 820 Net income before taxes 12,180 Income taxes 4,872 Net income 7,308 Dividends to common stockholders 525 Net income added to retained earnings 6,783 Beginning retained earnings 36,568 Ending retained earnings $ 43,351 10,800 6, 700 17,500 10,500 820 9,680 3,872 5,808 280 5,528 31,040 $ 36,568 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