Exercise 14-7 (Algo) Trend Percentages [LO14-1]

Rotorua Products, Limited, of New Zealand markets agricultural products for the burgeoning Asian consumer market. The companys current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows:

	Year 1	Year 2	Year 3	Year 4	Year 5
Sales	$ 4,624,010	$ 4,769,510	$ 5,117,590	$ 5,490,980	$ 5,743,080
Cash	$ 97,947	$ 88,956	$ 96,860	$ 83,158	$ 66,349
Accounts receivable, net	416,328	428,833	442,305	503,308	567,344
Inventory	819,377	869,447	816,180	888,981	915,103
Total current assets	$ 1,333,652	$ 1,387,236	$ 1,355,345	$ 1,475,447	$ 1,548,796
Current liabilities	$ 312,167	$ 330,862	$ 326,713	$ 321,366	$ 395,272

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).)

Exercise 14-1 (Algo) Common-Size Income Statement [LO14-1]

A comparative income statement is given below for McKenzie Sales, Limited, of Toronto:

McKenzie Sales, Limited Comparative Income Statement
	This Year	Last Year
Sales	$ 7,310,000	$ 5,555,600
Cost of goods sold	4,630,000	3,508,500
Gross margin	2,680,000	2,047,100
Selling and administrative expenses:
Selling expenses	1,395,000	1,072,000
Administrative expenses	704,500	614,500
Total expenses	2,099,500	1,686,500
Net operating income	580,500	360,600
Interest expense	104,000	87,000
Net income before taxes	$ 476,500	$ 273,600

Members of the companys board of directors are surprised to see that net income increased by only $202,900 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 (i.e., 0.1234 should be entered as 12.3).)

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 companys common stock at the end of this year was $26. All of the companys sales are on account.

Weller Corporation Comparative Balance Sheet (dollars in thousands)
	This Year	Last Year
Assets
Current assets:
Cash	$ 1,090	$ 1,240
Accounts receivable, net	9,600	7,000
Inventory	13,600	11,300
Prepaid expenses	720	640
Total current assets	25,010	20,180
Property and equipment:
Land	10,900	10,900
Buildings and equipment, net	43,514	39,692
Total property and equipment	54,414	50,592
Total assets	$ 79,424	$ 70,772
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 19,100	$ 17,800
Accrued liabilities	960	790
Notes payable, short term	270	270
Total current liabilities	20,330	18,860
Long-term liabilities:
Bonds payable	8,800	8,800
Total liabilities	29,130	27,660
Stockholders' equity:
Common stock	600	600
Additional paid-in capital	4,000	4,000
Total paid-in capital	4,600	4,600
Retained earnings	45,694	38,512
Total stockholders' equity	50,294	43,112
Total liabilities and stockholders' equity	$ 79,424	$ 70,772

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year	Last Year
Sales	$ 68,000	$ 65,000
Cost of goods sold	36,000	34,000
Gross margin	32,000	31,000
Selling and administrative expenses:
Selling expenses	11,000	10,300
Administrative expenses	7,400	6,800
Total selling and administrative expenses	18,400	17,100
Net operating income	13,600	13,900
Interest expense	880	880
Net income before taxes	12,720	13,020
Income taxes	5,088	5,208
Net income	7,632	7,812
Dividends to common stockholders	450	240
Net income added to retained earnings	7,182	7,572
Beginning retained earnings	38,512	30,940
Ending retained earnings	$ 45,694	$ 38,512

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.)