UPY Evaluating Performance Homework statement, and then proceed to the next panel. Championship Boxing, Inc. Statement of Cash Flows For the Year Ended December 31, 2048 Cash flows from (used for) operating activities: Net income $186,540 Adjustments to reconcile net income to net cash flow from operating activities: 18,400 (50,000) Depreciation Gain on sale of investments Changes in current operating assets and liabilities: Increase in accounts receivable Increase in inventories (25,390) (33,450) 41,100 (12,460) Increase in accounts payable $124,740 $280,000 (326,000) Decrease in accrued expenses payable Net cash flow from operating activities Cash flows from (used for) investing activities: Cash received from sale of investments Cash paid for purchase of land Cash paid for purchase of equipment Net cash flow used for investing activities Cash flows from (used for) financing activities: Cash received from sale of common stock Cash paid for dividends (152,000) (198,000) $187,500 (91,200) Net cash flow from financing activities 96,300 Net increase in cash $23,040 585,920 Cash balance, January 1, 20Y8 Cash balance, December 31, 20Y8 $608,960 Balance Sheet Using the information on above, complete the following comparative balance sheet. Championship Boxing, Inc. Comparative Balance Sheet December 31, 2048 and 2047 2018 2017 Assets Check My Work Next > Evaluating Performance Homework Mastery Problem: Statement of Cash Flows Championship Boxing, Inc. Championship Boxing, Inc. is a small manufacturer of cardboard boxes of all sizes. You have reported for your first day of work, and the company is in an uproar. Yearly financial statements are being prepared, but a computer malfunction of the company's new BOX-9000 computer has inadvertently erased parts of the company's balance sheet, along with almost all related data except the company's statement of cash flows. The IT department is working to retrieve earlier backups, but estimates that the reconstruction of the data will take about 24 hours. Unfortunately, financial statements are to be presented at a stockholders' meeting in one hour. The company uses the indirect method to prepare its statement of cash flows (rather than the direct method), so your new supervisor believes the missing data for the balance sheet can be prepared using the statement of cash flows. You are assigned this task, since you were top student in your business school class. Meanwhile, the supervisor will go to the stockholders' meeting and give some introductory remarks. In addition to the statement of cash flows, the following data survived the computer mishap: The investments were sold for $280,000 cash. Equipment was acquired for $152,000 cash. Land was acquired for $326,000 cash. There were no disposals of equipment during the year. 12,500 shares of common stock were sold for cash during the year. There was a $96,000 debit to Retained Earnings for cash dividends declared. Statement of Cash Flows Your supervisor has provided you with the following statement of cash flows, prepared using the indirect method. Recall that the statement of cash flows consists of three sections: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Review the statement, and then proceed to the next panel. Championship Boxing, Inc. Statement of Cash Flows For the Year Ended December 31, 2018 Cash flows from (used for) operating activities: Net income $186,540 18,400 (50,000) Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Gain on sale of investments Changes in current operating assets and liabilities: Increase in accounts receivable Increase in inventories Increase in accounts payable Decrease in accrued expenses payable Net cash flow from operating activities Cash flows from (used for) investing activities: (25,390) (33,450) 41,100 (12,460) $124,740 -- -----.. .---- --I - -- - Check My Work Next > Evaluating Performance Homework Calculator E Print Item For the Years Ended December 31, 2046 and 2015 Increase/(Decrease) 2016 2045 Amount Percentage Sales $7,267,000 $ Cost of goods sold (3,444,000) Gross profit $3,823,000 Selling expenses $(1,453,200) (1,103,000) Administrative expenses (1,239,000) Total operating expenses $(2,556,200) Operating income $1,266,800 Other expense interest) (120,600) Income before income tax expense $1,146,200 Income tax expense (179,460) Net income $966,740 Feedback Check My Work For missing amounts, review their definitions in your text. Changes in the horizontal analysis may be increases or decreases. Final Questions Your accountant friend reveals that the company whose information you have been working on is actually a company he is thinking of investing in. What advice and insight do you have for your friend? Using only the information from your horizontal analysis of the comparative income statement, complete the following sentences. Net income has decreased significantly from 2015 to 2016, even though sales has increased. However, cost of goods sold has also increased , which slowed the increase in gross profit . In addition, selling expenses has increased at a faster rate. The company appears to be struggling .. Based on these observations, do you recommend that your friend invest in this company's stock? Yes Feedback Check My Work What are the biggest changes between 2015 and 2016? Feedback Check My Work Previous UP Evaluating Performance Homework Calculator Print Item Profitability Measures Match each computation to one of the profitability measures in the table. Profitability Measures Computations Asset turnover $8,260,000 = [($5,781,000 + $5,591,000) 2] Return on total assets ($791,340 + $127,000) = [($6,605,000 + $6,415,000) = 2] Return on stockholders' equity $791,340 = [($4,075,000 + $3,871,250) + 2] Return on common stockholders' equity ($791,340 - $65,000) = [($3,587,500 + $3,444,000) + 2] Earnings per share on common stock ($791,340 - $65,000) = 250,000 shares Price-earnings ratio $35 - $3.05 Dividends per share $175,000 = 250,000 shares Dividend yield $0.70 $35 Feedback Check My Work Look for patterns in the computations and match them to ratios that are related to each other. Identify the amounts in the computations and consider how they are related to amounts in other computations. Note that two of the computations use shares. Comparative Income Statement Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part and on the Profitability Measures part. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If 5, round up. For example, for 32.048% enter 32.0%. For 32.058% enter 32.1%. Comparative Income Statement For the Years Ended December 31, 20Y6 and 2015 Increase/(Decrease) 2046 2015 Amount Percentage $7,267,000 Sales Cost of goods sold (3,444,000) Gross profit Selling expenses $3,823,000 $(1,453,200) (1,103,000) $(2,556,200) Administrative expenses (1,239,000) Total operating expenses Operating income $1,266,800 (120,600) Other expense (interest) Check My Work Previous Print Item Evaluating Performance Homework Calculator they are related to amounts in other computations. Balance Sheet Use the following balance sheet form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part. You will identify other amounts for the balance sheet on the Profitability Measures part. If you have a choice of two amounts, assume the first amount in the ratio is for the end of the year. Compute any missing amounts. Balance Sheet December 31, 2016 Assets Current assets: Cash $823,000 329,000 Marketable securities Accounts receivable (net) Inventory Prepaid expenses Total current assets $ 714,000 1,072,000 153,000 3,091,000 824,000 2,690,000 6,605,000 Long-term investments Property, plant, and equipment (net) Total assets $ Liabilities Current liabilities Long-term liabilities 840,000 1,690,000 2,530,000 Total liabilities $ Stockholders' Equity Preferred stock, $10 par Common stock, $5 par Retained earnings 487,500 1,250,000 2,341,500 x 4,015,000 x 6,605,000 Total stockholders' equity Total liabilities and stockholders' equity $ Feedback Check My Work Identify the amounts in the Liquidity and Solvency Measures panel and the Profitability Measures panel that are balance sheet items and enter them accordingly. Check My Work Previous UPY Evaluating Performance Homework statement, and then proceed to the next panel. Championship Boxing, Inc. Statement of Cash Flows For the Year Ended December 31, 2048 Cash flows from (used for) operating activities: Net income $186,540 Adjustments to reconcile net income to net cash flow from operating activities: 18,400 (50,000) Depreciation Gain on sale of investments Changes in current operating assets and liabilities: Increase in accounts receivable Increase in inventories (25,390) (33,450) 41,100 (12,460) Increase in accounts payable $124,740 $280,000 (326,000) Decrease in accrued expenses payable Net cash flow from operating activities Cash flows from (used for) investing activities: Cash received from sale of investments Cash paid for purchase of land Cash paid for purchase of equipment Net cash flow used for investing activities Cash flows from (used for) financing activities: Cash received from sale of common stock Cash paid for dividends (152,000) (198,000) $187,500 (91,200) Net cash flow from financing activities 96,300 Net increase in cash $23,040 585,920 Cash balance, January 1, 20Y8 Cash balance, December 31, 20Y8 $608,960 Balance Sheet Using the information on above, complete the following comparative balance sheet. Championship Boxing, Inc. Comparative Balance Sheet December 31, 2048 and 2047 2018 2017 Assets Check My Work Next > Evaluating Performance Homework Mastery Problem: Statement of Cash Flows Championship Boxing, Inc. Championship Boxing, Inc. is a small manufacturer of cardboard boxes of all sizes. You have reported for your first day of work, and the company is in an uproar. Yearly financial statements are being prepared, but a computer malfunction of the company's new BOX-9000 computer has inadvertently erased parts of the company's balance sheet, along with almost all related data except the company's statement of cash flows. The IT department is working to retrieve earlier backups, but estimates that the reconstruction of the data will take about 24 hours. Unfortunately, financial statements are to be presented at a stockholders' meeting in one hour. The company uses the indirect method to prepare its statement of cash flows (rather than the direct method), so your new supervisor believes the missing data for the balance sheet can be prepared using the statement of cash flows. You are assigned this task, since you were top student in your business school class. Meanwhile, the supervisor will go to the stockholders' meeting and give some introductory remarks. In addition to the statement of cash flows, the following data survived the computer mishap: The investments were sold for $280,000 cash. Equipment was acquired for $152,000 cash. Land was acquired for $326,000 cash. There were no disposals of equipment during the year. 12,500 shares of common stock were sold for cash during the year. There was a $96,000 debit to Retained Earnings for cash dividends declared. Statement of Cash Flows Your supervisor has provided you with the following statement of cash flows, prepared using the indirect method. Recall that the statement of cash flows consists of three sections: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Review the statement, and then proceed to the next panel. Championship Boxing, Inc. Statement of Cash Flows For the Year Ended December 31, 2018 Cash flows from (used for) operating activities: Net income $186,540 18,400 (50,000) Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Gain on sale of investments Changes in current operating assets and liabilities: Increase in accounts receivable Increase in inventories Increase in accounts payable Decrease in accrued expenses payable Net cash flow from operating activities Cash flows from (used for) investing activities: (25,390) (33,450) 41,100 (12,460) $124,740 -- -----.. .---- --I - -- - Check My Work Next > Evaluating Performance Homework Calculator E Print Item For the Years Ended December 31, 2046 and 2015 Increase/(Decrease) 2016 2045 Amount Percentage Sales $7,267,000 $ Cost of goods sold (3,444,000) Gross profit $3,823,000 Selling expenses $(1,453,200) (1,103,000) Administrative expenses (1,239,000) Total operating expenses $(2,556,200) Operating income $1,266,800 Other expense interest) (120,600) Income before income tax expense $1,146,200 Income tax expense (179,460) Net income $966,740 Feedback Check My Work For missing amounts, review their definitions in your text. Changes in the horizontal analysis may be increases or decreases. Final Questions Your accountant friend reveals that the company whose information you have been working on is actually a company he is thinking of investing in. What advice and insight do you have for your friend? Using only the information from your horizontal analysis of the comparative income statement, complete the following sentences. Net income has decreased significantly from 2015 to 2016, even though sales has increased. However, cost of goods sold has also increased , which slowed the increase in gross profit . In addition, selling expenses has increased at a faster rate. The company appears to be struggling .. Based on these observations, do you recommend that your friend invest in this company's stock? Yes Feedback Check My Work What are the biggest changes between 2015 and 2016? Feedback Check My Work Previous UP Evaluating Performance Homework Calculator Print Item Profitability Measures Match each computation to one of the profitability measures in the table. Profitability Measures Computations Asset turnover $8,260,000 = [($5,781,000 + $5,591,000) 2] Return on total assets ($791,340 + $127,000) = [($6,605,000 + $6,415,000) = 2] Return on stockholders' equity $791,340 = [($4,075,000 + $3,871,250) + 2] Return on common stockholders' equity ($791,340 - $65,000) = [($3,587,500 + $3,444,000) + 2] Earnings per share on common stock ($791,340 - $65,000) = 250,000 shares Price-earnings ratio $35 - $3.05 Dividends per share $175,000 = 250,000 shares Dividend yield $0.70 $35 Feedback Check My Work Look for patterns in the computations and match them to ratios that are related to each other. Identify the amounts in the computations and consider how they are related to amounts in other computations. Note that two of the computations use shares. Comparative Income Statement Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part and on the Profitability Measures part. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If 5, round up. For example, for 32.048% enter 32.0%. For 32.058% enter 32.1%. Comparative Income Statement For the Years Ended December 31, 20Y6 and 2015 Increase/(Decrease) 2046 2015 Amount Percentage $7,267,000 Sales Cost of goods sold (3,444,000) Gross profit Selling expenses $3,823,000 $(1,453,200) (1,103,000) $(2,556,200) Administrative expenses (1,239,000) Total operating expenses Operating income $1,266,800 (120,600) Other expense (interest) Check My Work Previous Print Item Evaluating Performance Homework Calculator they are related to amounts in other computations. Balance Sheet Use the following balance sheet form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part. You will identify other amounts for the balance sheet on the Profitability Measures part. If you have a choice of two amounts, assume the first amount in the ratio is for the end of the year. Compute any missing amounts. Balance Sheet December 31, 2016 Assets Current assets: Cash $823,000 329,000 Marketable securities Accounts receivable (net) Inventory Prepaid expenses Total current assets $ 714,000 1,072,000 153,000 3,091,000 824,000 2,690,000 6,605,000 Long-term investments Property, plant, and equipment (net) Total assets $ Liabilities Current liabilities Long-term liabilities 840,000 1,690,000 2,530,000 Total liabilities $ Stockholders' Equity Preferred stock, $10 par Common stock, $5 par Retained earnings 487,500 1,250,000 2,341,500 x 4,015,000 x 6,605,000 Total stockholders' equity Total liabilities and stockholders' equity $ Feedback Check My Work Identify the amounts in the Liquidity and Solvency Measures panel and the Profitability Measures panel that are balance sheet items and enter them accordingly. Check My Work Previous