Exercises: Set A 21. Trend Analysis. The following condensed income statement is for CarMax, Inc. a large retailer of used vehicles. CarMax, Inc. Income Statement Years Ended February 28, 2015 and 2014 (In millions) 2015 2014 Net sales Cost of goods sold Gross margin Selling and administrative expenses Operating Income Interest expense Other income (expenses), net Income before taxes Income tax expense Net income $14,269 P2238 1.888 892 996 24 $12.574 10.925 1,649 819 830 31 10 798 305 493 959 Required: a. Prepare a trend analysis of the income statements from 2014 to 2015. Use the format shown in Figure 13.1 as a guide. (Round computations to one decimal place.) b. What does the trend analysis prepared in requirement a tell you about the company? 22. Common-Size Analysis. Refer to the condensed income statement for CarMax, Inc., in Exercise 21. Required: a. Prepare a common-size analysis of the income statements for 2015 and 2014. Use the format shown in Figure 13.5 as a guide. (Round computations to one decimal place.) b. What does the common-size analysis in requirement a tell you about the company? 23. Profitability Ratios. Refer to the condensed income statement for CarMax, Inc., in Exercise 21 and to the company's balance sheet shown as follows. Assume the company had no preferred stock dividends for both years CarMax, Inc. Balance Sheet February 28, 2015 and 2014 in million) 2013 2015 2014 322 Assets Current assets Cash and cash equivalents Accounts receivable.net Merchandise inventory Other current assets Total current sets Noncurrent assets Auto loan cables.net Property, plant and equipment, net Other assets Total assets 5887 80 1.641 25 2,64) 52 2.500 1,863 300 1 190 7.140 1,653 263 ST1 707 5 702 Liabilities and shareholders equity Current abilities Accounts payable and other abilities Short-term doubt Current portion of long-term debt Total current liabilities Noncurrent liabilities Long term debt Other abilities Shareholders equity Common stock Retained earnings Total abilities and shareholders equity $632 1 242 875 289 1997 3:319 7,34) 174 1.228 1.920 1.149 2.168 51.207 Required: Compute the following profitability ratios for 2015, and provide a brief explanation after each ratio (round percentage computations to one decimal place and earnings per share to Two decimal places) 1. Gross margin ratio 2. Profit margin ratio 3. Return on assets 4. Return on common shareholders' equity 5. Earnings per share (assume weighted average shares outstanding totaled 215,617,000 shares) 24 Short-Term Liquidity Ratios. Refer to the condensed income statement for CarMax, Inc., in Exercise 21 and to the company's balance sheet in Exercise 23 Required: Compute the following short-term iquidity ratios for 2015, and provide a brief explanation after each ratio round computations to two decimal places 1. Current ratio 2. Quick ratio 3. Receivables turnover ratio and average collection period (assume all sales are on account) 4. Inventory turnover ratio and average sale period 25. Long-Term Solvency Ratios. Refer to the condensed income statement for CarMax, Inc. in Exercise 21 and to the company's balance sheet in Exercise 23 Required: Compute the following long-term solvency ratios for 2015, and provide a brief explanation after each ratio round computations to two decimal places 1. Debt to assets TO
