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, bet Inventory Total current assets Current liabilities Year 1 $ 4,544,410 $ 87,591 415,707 813,857 $1,317,233 $ 300,630 Year 2 $ 4,825,990 $ 99,547 428,842 876,805 $ 1,405,194 $ 348,039 Year 55,074,780 $ 69,945 441,005 818, 249 5.1.350,499 $ 324,132 Year 4 $ 5,468,320 $ 84,981 499,094 884,597 $ 1,468,672 $319,222 Year 5 $ 5,794,000 $ 76,569 570,647 904.845 $ 1,552,041 $ 396,078 ces 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 (l.e., 0.1234 should be entered as 12.3).) Year 2 Yoar 3 Year 4 Year 5 Year 1 100.0 % % % % % X % Sales Current assets: Cash Accounts receivable.net Inventory Total current assets Current liabilities 100.0 % 100.0% 100.0% 100.0 % 100.0 % % % % % % % % % % % X % % % % Exercise 14-1 (Algo) Common-Size Income Statement (L014-1) A comparative Income statement is given below for McKenzie Sales, Limited, of Toronto: Last Year $ 5,616,400 3,513,500 2,102,900 McKenzie Sales, Limited Comparative Income Statement This Year Sales $ 7,390,000 Cost of goods sold 4,730,000 Gross margin 2,660,000 Selling and administrative expenses: Selling expenses 1,382,000 Administrative expenses 704,500 Total expenses 2,086,500 Net operating income 573,500 Interest expense 105,000 Net income before taxes $ 468,500 1,081,000 612,000 1,693,000 409,900 85,000 $ 324,900 Members of the company's bourd of directors are surprised to see that net income increased by only $143,600 when sales increased by $1,773,600 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).) Last Year This Year % % 0.01% % 0.01% % Sales Cost of goods sold Gross margin Selling and administrative expenses Selling expenses Administrative expenses Total seling and administrative expenses Not operating income Interest expense Net income before taxes % 00% 0.01% % 0.01% % % 0.01% 0.0% % 0.01% Exercise 14-2 (Algo) Financial Ratios for Assessing Liquidity (L014-2] 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 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 $22. All of the company's sales are on account ok Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,210 10,400 13,000 610 25, 220 $ 1,240 6,800 12.300 590 20,930 hoes 10,400 46.537 54.937 $ 80,157 10,400 39.946 50,346 $271,276 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 $ 20,000 970 200 21,170 $ 18,700 850 200 19,750 9,900 31,070 9.900 29,650 700 4,000 4,700 44,387 49,087 5 80,157 700 4.000 4,700 36,926 41,626 $ 71,276 Welter Corporation Comparative Income Statement and Reconciliation Last Year $ 66,000 39,000 27,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $ 70,000 Cost of goods sold 38,000 Gross margin 32,000 Selling and administrative expenses : Selling expenses 10,700 Administrative expenses 7,000 Total selling and administrative expenses 17,700 Net operating income 14,300 Interest expense 990 Net income before taxes 13,310 IN me taxes 5,324 Net income 7,986 Dividends to common stockholders 525 Net income added to retained earnings 7,461 Beginning retained earnings 36,926 Ending retained earnings $ 44,387 10,000 6,400 16,400 10,600 990 9,610 3,844 5,766 280 5,486 31,440 $ 36,926 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 Last Year $ 66,000 39,000 27,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $ 73, 710 Cost of goods sold 33,205 Gross margin 40,505 Selling and administrative expenses: Selling expenses 11,100 Administrative expenses 7.300 Total selling and administrative expenses 18,400 Net operating income 22,105 Interest expense 900 Net Income before taxes 21, 205 Income taxes 8,482 Net income 12,723 Dividends to common stockholders Net Income added to retained earnings 12,483 Beginning retained earnings 36,260 Inding retained earningo $ 48,743 10,600 6,300 16,900 10,100 900 9,200 3,680 5,520 300 5,220 31,040 $ 36,260 240 Required: Compute the following financial data for this year 1. Accounts receivable turnover. (Assume that all sales are on account) (Round your answer to 2 decimal places.) 2. Average collection period. (Use 365 days in a year . Round your intermediate calculations and final answer to 2 decimal places.) 3. Inventory turnover (Round your answer to 2 decimal places.) 4. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.) 5. Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.) 6. Total asset turnover (Round your answer to 2 decimal places.) days 1. Accounts receivable turnover 2. Average collection period 3. Inventory turnover 4. Average sale period 5. Operating cyclo 6. Total asset turnover days days