MANAGERIAL ACCOUNTING HANDOUT PROBLEM 15 Score Name Section Problem (10 points). Attached are the comparative balance sheets for Verdi Company at December 31, 20X1 and 20X0 as well as the income statement for the year ending December 31, 20X1. REQUIRED: (1) Prepare a horizontal analysis for the balance sheet from 20X0 to 20X1. Round all percentages to two decimal places (four places for those answers left in decimal form). Prepare a vertical analysis for the income statement. Round all percentages to two decimal places (four places for those answers left in decimal form). Compute the following financial ratios for the company for 20X1. Round all percentages to two decimal places (four places for those answers left in decimal form) and all other answers to two decimal places. (a) Return on average total assets. (b) Return on sales. (c) Return on average common stockholders' equity. (d) Current ratio. (e) Quick ratio (f) Accounts receivable turnover Inventory turnover. (h) Debt to equity ratio. (g) VERDI COMPANY COMPARATIVE BALANCE SHEETS (IN THOUSANDS) AT DECEMBER 31, 20X1 AND 20X0 20X1 2 0X0 ASSETS Cash 1.220 1.618 1.925 1.070 2.112 966 188 3.292 Accounts Receivable Merchandise Inventory Prepaid Expenses Buildings Accumulated Depreciation, Buildings Equipment Accumulated Depreciation Equipment TOTAL ASSETS ( 4,818 361) 1.434 141) 10,551S ( 1.145 100) 8,484 1,818 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable Notes Payable, Short Term Notes Payable, Long Term Common Stock, No par value Retained Earnings TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 900 2.500 3.390 1.943 2.041 10,551 8,484 11-22 VERDI COMPANY INCOME STATEMENT (IN THOUSANDS) FOR YEAR ENDING DECEMBER 31, 20X1 Sales Revenue Cost of Goods Sold Gross Margin From Sales Operating Expenses: Depreciation Expense, Buildings and Equipment S 1 02 Other Selling and Administrative 2.667 Total Operating Expenses Income Before Interest and Income Taxes Interest Expense Income Before Income Taxes Income Tax Expense Net Income