Trend Analysis. The following condensed income statement is for CarMax, Inc., a large retailer of used vehicles.

SALES AND OPERATING REVENUES:	2019	2018
REVENUES	20,319,987	18,173,100
TOTAL COST OF SALES	17,597,647	15,692,509
GROSS PROFIT	2,722,340	2,480,591
CARMAX AUTO FINANCE INCOME	456,030	438,690
Selling, general and
administrative expenses	1,940,067	1,730,275
Interest expense	83,007	75,792
Other (income) expense	(5,690)	408
Earnings before income taxes	1,160,986	1,112,806
Income tax provision	272,553	270,393
NET EARNINGS	$ 888,433	$ 842,413

Required:

1. Prepare a trend analysis of the income statements from 2018 to 2019. Use the format shown in the chapter as a guide. (Round computations to one decimal place.)

What does the trend analysis prepared in requirement a tell you about the company?

21. Common-Size Analysis. Refer to the condensed income statement for CarMax, Inc., in Exercise 20.

Required:

21. 1. Prepare a common-size analysis of the income statements for 2019 and 2018. Use the format shown in the chapter as a guide. (Round computations to one decimal place.)
    2. What does the common-size analysis in requirement a tell you about the company?

22. Profitability Ratios. Refer to the condensed income statement for CarMax, Inc., in Exercise 20 and to the companys balance sheet shown as follows.

    ASSETS
    CURRENT ASSETS:	2019	2018
    Cash and cash equivalents	$ 58,211	$ 46,938
    Restricted cash from collections on auto loans receivable	481,043	440,669
    Accounts receivable, net	191,090	139,850
    Inventory	2,846,416	2,519,455
    Other current assets	86,927	67,101
    TOTAL CURRENT ASSETS	3,663,687	3,214,013
    Auto loans receivable, net	13,551,711	12,428,487
    Property and equipment, net	3,069,102	2,828,058
    Deferred income taxes	89,842	61,346
    Operating lease assets	449,094
    Other assets	258,746	185,963
    TOTAL ASSETS	$ 21,082,182	$ 18,717,867
    CURRENT LIABILITIES:
    Accounts payable	$ 737,144	$ 593,171
    Accrued expenses and other current liabilities	331,738	318,204
    Accrued income taxes	1,389	3,784
    Current portion of operating lease liabilities	30,980
    Short-term debt	40	1,129
    Current portion of long-term debt	9,251	10,177
    Current portion of non-recourse notes payable	424,165	385,044
    TOTAL CURRENT LIABILITIES	1,534,707	1,311,509
    Long-term debt, excluding current portion	1,778,672	1,649,244
    Non-recourse notes payable, excluding current portion	13,165,384	12,127,290
    Operating lease liabilities, excluding current portion	440,671
    Other liabilities	393,873	272,796
    TOTAL LIABILITIES	17,313,307	15,360,839
    Common Stock	81,541	83,739
    Capital in excess of par value	1,348,988	1,237,153
    Accumulated other comprehensive loss	(150,071)	(68,010)
    Retained earnings	2,488,417	2,104,146
    TOTAL SHAREHOLDERS EQUITY	3,768,875	3,357,028
    TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	$ 21,082,182	$ 18,717,867

    Required:

    Compute the following profitability ratios for 2019, 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 223,449,000 shares)

23. Short-Term Liquidity Ratios. Refer to the condensed income statement for CarMax, Inc., in Exercise 20 and to the companys balance sheet in Exercise 22.

    Required:

    Compute the following short-term liquidity ratios for 2019, 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

24. Long-Term Solvency Ratios. Refer to the condensed income statement for CarMax, Inc., in Exercise 20 and to the companys balance sheet in Exercise 22.

    Required:

    Compute the following long-term solvency ratios for 2019, and provide a brief explanation after each ratio (round computations to two decimal places):

    1. Debt to assets
    2. Debt to equity
    3. Times interest earned

Answer Question 23 and Question 24 only