Selected information from the financial statements of Remmer, Inc., includes the following.

Year 2Year 1Net sales$2,200,000$2,000,000Total expenses2,005,0001,800,000

a-1.Compute the percentage change in year 2 for the amounts of net sales.

a-2.Compute the percentage change in year 2 for the amounts of total expenses.

b-1.State whether the following statement is true or false; Net income increased at a greater percentage rate than did net sales.

Some of the accounts appearing in the year-end financial statements of Rogand Grocery, Inc., appear as follows. This list includes all of the company's current assets and current liabilities.

Sales$1,880,000Accumulated depreciation: equipment370,000Notes payable (due in 90 days)70,000Retained earnings241,320Cash69,400Capital stock150,000Marketable securities175,040Accounts payable128,100Mortgage payable (due in 15 years)320,000Salaries payable7,570Dividends25,000Income taxes payable14,600Accounts receivable230,540Inventory179,600Unearned revenue10,000Unexpired insurance4,500

Required:

a.Make a schedule of the company's current assets and current liabilities. Select the appropriate items from the preceding list.

b-1.Compute the current ratio.

b-2.Compute the amount of working capital.

b-3.State whether you consider the company to be in a strong or weak current position.

Shown are selected data from a recent annual report ofCVS Health, a large drugstore chain. (Dollar amounts are in millions.)

Beginning

of the YearEnd of

the YearTotal assets$94,462$95,131Total stockholders' equity36,83437,695Operating income9,517Net income6,623

a.Compute for the year CVS Health's return on average total assets.

b.Compute for the year CVS Health's return on average total stockholders' equity.

(Do not round intermediate calculations. Round your percentage answers to 2 decimal places. i.e. 0.1234 as 12.34%.)

SPINX, INC.

Income Statement

For the Year Ended December 31, CURRENT YEARNet sales$4,395,253Costs and expenses:Cost of goods sold(2,821,455)Operating expenses(1,004,396)Interest revenue15,797Earnings before income tax$585,199Income tax expense(204,820)Net earnings$380,379Earnings per share$1.70

Comparative balance sheets report average total assets for the year of $2,575,000 and average total equity of $1,917,000 (dollar amounts in thousands, except earnings per share).

a.Prepare an income statement for the year in a multiple-step format.

b-1.Compute the gross profit rate.

b-2.Express the net income as a percentage of net sales.

b-3.Compute the return on assets.

b-4.Compute the return on equity for the year.

Exercise 14.3 (Algo) Common Size Income Statements (LO14-1)

Year 2Year 1Sales$520,000$398,000Cost of goods sold330,000268,000Gross profit$190,000$130,000Operating expenses130,000116,000Net income$60,000$14,000

a.Prepare common size income statements for Price Company, a sole proprietorship, for the two years shown as above by converting the dollar amounts into percentages. For each year, sales will appear as 100 percent and other items will be expressed as a percentage of sales. (Income taxes are not involved as the business is not incorporated.)

b.State whether the changes from year 1 to year 2 are favorable or unfavorable.

A recent balance sheet of Sweet Tooth, Inc., included the following items, among others. (Dollar amounts are stated in thousands.)

Cash$50,230Marketable securities (short-term)55,926Accounts receivable23,553Inventories32,210Prepaid expenses5,736Retained earnings121,477Notes payable to banks (due within one year)20,000Accounts payable5,912Dividends payable1,560Accrued liabilities (short-term)21,532Income taxes payable6,438

The company also reported total assets of $353,816 thousand, total liabilities of $81,630 thousand, and a return on total assets of 18.1 percent.

Required:

a.Compute Sweet Tooth's (1) quick assets, (2) current assets, and (3) current liabilities.

b.Compute Sweet Tooth's (1) quick ratio, (2) current ratio, (3) working capital, and (4) debt ratio.(Round ratios to 1 decimal place.)