Financial Statement Analysis

Exercise 12-2A Prepare vertical analysis (LO12-1) The income statements for Federer Sports Apparel for 2022 and 2021 are presented below. Required: Prepare a vertical analysis of the data for 2022 and 2021. (Round your percentage answers to 1 decimal place.) % FEDERER SPORTS APPAREL Income Statement For the Years Ended December 31 2022 Amount % $ 18,300,000 $ 13,395,600 4,904,400 1,464,000 878,400 109,800 1,372,500 1,079,700 347,700 $ 732,000 $ 2021 Amount 15,000,000 6,705,000 8,295,000 1,080,000 900,000 Net sales Cost of goods sold Gross profit Operating expenses Depreciation expense Inventory write-down Loss (litigation) Income before tax Income tax expense Net income 360,000 5,955,000 1,860,000 4,095,000 The income statements for Federer Sports Apparel for 2022 and 2021 are presented below. Required: Prepare a horizontal analysis for 2022 using 2021 as the base year. (Decreases should be indicated with a minus sign. Round your percentage answers to 1 decimal place.) Increase (Decrease) Amount % Net sales Cost of goods sold Gross profit Operating expenses Depreciation expense Inventory write-down Loss (litigation) FEDERER SPORTS APPAREL Income Statement For the Years Ended December 31 Year 2022 2021 $ 18,400,000 $ 15,100,000 13,358,400 6,764,800 5,041,600 8,335,200 1,490,400 1,102,300 901,600 901,600 128,800 1,398,400 347,300 1,122,400 5,984,000 368,000 1,887,500 $ 754,400 $ 4,096,500 Income before tax Income tax expense Net income THE ATHLETIC ATTIC Income Statements For the years ended December 31 2022 2021 Net sales $11,380,000 $9,850,000 Cost of goods sold 7,430,000 6,100,000 Gross profit 3,950,000 3,750,000 Expenses: Operating expenses 1,670,000 1,620,000 Depreciation expense 200,000 200,000 Interest expense 47.000 47,000 Income tax expense 484,000 420,000 Total expenses 2,401,000 2,287,000 Net income $ 1,549,000 $1,463,000 2021 2021 2020 2020 $ 161,000 747,000 1,362,000 107,000 $ 218,000 7 67,000 1,032,000 82,000 THE ATHLETIC ATTIC Balance Sheets December 31 2022 Assets Current assets: Cash $ 232,000 Accounts receivable 997,000 Inventory 1,732,000 Supplies 137,000 Long-term assets: Equipment 1,380,000 Less: Accumulated depreciation (670,000) Total assets $3,808,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 195,300 Interest payable 4,700 Income tax payable 47,000 Long-term liabilities: Notes payable 570,000 Stockholders' equity: Common stock 670,000 Retained earnings 2,321,000 Total liabilities and stockholders' equity $3,808,000 1,380,000 (470,000) $3,287,000 1,380,000 (270,000) $3,209,000 $ $ 126,000 6 42,000 570,000 108,300 4 ,700 37,000 570,000 670,000 1,879,000 $3,287,000 670,000 1,819,000 $3,209,000 Problem 12-6B Part 1 Required: 1. Calculate the following risk ratios for 2021 and 2022: (Round your answers to 1 decimal place.) 2022 times 2021 times times to 1 Receivables turnover ratio Inventory turnover ratio Current ratio Debt to equity ratio times to 1 Income statement and balance sheet data for The Athletic Attic are provided below. THE ATHLETIC ATTIC Income Statements For the years ended December 31 2022 2021 Net sales $11,380,000 $9,850,000 Cost of goods sold 7,430,000 6,100,000 Gross profit 3,950,000 3,750,000 Expenses: Operating expenses 1,670,000 1,620,000 Depreciation expense 200,000 200,000 Interest expense 47,000 47,000 Income tax expense 484,000 420,000 Total expenses 2,401,000 2,287,000 Net income $ 1,549,000 $1,463,000 1 2022 2021 2021 2020 2020 $ 161,000 747,000 1,362,000 107,000 $ 218,000 7 67,000 1,032,000 82,000 THE ATHLETIC ATTIC Balance Sheets December 31 2022 Assets Current assets: Cash $ 232,000 Accounts receivable 997,000 Inventory 1,732,000 Supplies 137,000 Long-term assets: Equipment 1,380,000 Less: Accumulated depreciation (670,000) Total assets $3,808,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 195,300 Interest payable 4,700 Income tax payable 47,000 Long-term liabilities: Notes payable 570,000 Stockholders' equity: Common stock 670,000 Retained earnings 2,321,000 Total liabilities and stockholders' equity $3,808,000 1,380,000 (470,000) $3,287,000 1,380,000 (270,000) $3,209,000 $ 126,000 $ 108,300 4,700 37,000 42,000 570,000 570,000 670,000 1,879,000 $3,287,000 670,000 1,819,000 $3,209,000 Problem 12-6B Part 2 2. Calculate the following profitability ratios for 2021 and 2022: (Round your answers to 1 decimal place.) 2021 % 2022 % Gross profit ratio Return on assets Profit margin Asset turnover times times