Vertical Analysis of income Statement The following comparative income statement in thousands of dollars) for two recent fiscal years was adaptec from the annual report of Speedway Motorsports, Inc. (TRK), owner and operator of several major motor speedways, such as the Atlanta, Texas, and Las Vegas Motor Speedways. Current Year Previous Year Revenues: Admissions $90,639 $100,694 Event-related revenue 136,900 224,227 60,390 146,980 217,469 NASCAR broadcasting revenue 31,320 $496,463 $512,156 Other operating revenue Total revenues Expenses and other: Direct expense of events NASCAR event management fees Other direct expenses General and administrative $(102,786) (137,727) (43,784) (166,663) $(450,960) $(104,303) (133,682) (19,541) (285,166) Total expenses and other Income from continuing operations $(542,692) $(46,229) $61,196 a. Prepare a comparative income statement for these two years in vertical form stating each item as a percent of revenues (Note: Due to rounding amounts may not total 100%) Round your percentages to one decimal place Speedway Motorsports, Inc Comparative Income Statement (in thousands of dollars) For the Years Ended December 31 Current Year Current Year Prior Year Prior Year Amount Percent Amount Percent Revenues Admissions 590,639 $100,694 Event-related revenue 136,900 145,980 NASCAR broadcasting revenue 224,227 217,469 46 Other operating revenue 60,390 9 31,320 9 Total revenues $512,156 9 $496,463 % texpenses and other Direct expense of events $(102,786) ${104,303) MASCAR event management fees (37,727) (135,682) Other direct expenses (43,784) (19.541) General and administrative (160,663) (285,166) Total expenses and other $(450.900 $(542.692) come from continuing operations $61,196 $(45,229) 1 b. Which of the following statements are correct? b. Which of the following statements are correct? 1. Overall revenue increased between the two years, with changes in the mix of revenue sources The NASCAR broadcasting revenue remained stable while admissions reverte decreased as a percentage of total revenue 2. One of the major expense categories, NASCAR event management fees, remained stable 3. The Direct expense of events increased, while other direct expenses nemained stable 4 General and administrative expenses, however, decreased significantly. This decreased general and administrative cost was the driving factor behind the increase income from continuing operations Common-Sized Income Statement Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics Industry are as follows. Tannenhill's data are expressed in dollars. The electronics Industry averages are expressed in percentages. Electronics Industry Average Sales 100.0 Cost of goods sold Gross profit Selling expenses Administrative expenses Tannenhill Company $4,000,000 (2,120,000) $1,880,000 $(1,080,000) (640,000) $(1,720,000) $160,000 (60.0) 40.0 % (24.) % (14.0) (38.0) % Total operating expenses Operating income Other revenue and expense: 2.0 % Other revenue 3.0 Other expense 120,000 (80,000) (2.0) Income before income tax expense $200,000 3.0 % Income tax expense (2.0) (80,000) $120,000 Net Income 1.096 a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the industry average Tannenhill Company Common-Sized Income Statement For the Year Ended December 31 Tannenhill Tannenhill Electronics Company Company Industry Amount Percent Average Sales $4,000,000 % 100% Cost of goods sold (2,120,000) (60) Gross profit $1,880,000 % 4096 Selling expenses $(1,080,000) % (24)% Administrative expenses (640,000) Total operating expenses $(1.720,000) 96 (39) Operating Income $160,000 9% 2% Other revenue and expense: Other revenue 120,000 3 Other expense (80,000) (2) Income before income tax expense $200,000 3% Income tax expense (80,000) (2) 3 $120,000 1 Net Income b. The company is managing the cost of manufacturing product than the industry, and has slightly selling and administrative expenses relative to the industry. The combined impact causes net income as a percent of sales to be than the industry average. Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31 are as follows: Current Year Previous Year $2,240,000 (1,925,000) $315,000 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income before income tax expense $2,000,000 (1,750,000) $250,000 $(125,000) (100,000) $(225,000) $(152,500) (118,000) $(270,500) $44,500 $25,000 Income tax expense (17,800) $26,700 (10,000) $15.000 Net Income a. Prepare a comparative Income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year Amount year Amount (Decrease) Amount (Decrease) Percent Sales $2,240,000 $2,000,000 $ 95 compared with the previous year. If required, round to one decimal place. IL Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year Amount year Amount (Decrease) Amount (Decrease) Percent Sales $2,240,000 $2,000,000 Cost of goods sold (1,925,000) (1,750,000) Gross profit 5315,000 $250,000 96 Selling expenses $(152,500) $(125,000) 96 Administrative expenses (118,000) (100,000) 20 Total operating expenses S(270,500) $(225,000 $ Income before income tax expense $44,500 $25,000 Income tax expense (17,800) (10,000) Net Income $26,700 $15.000 % 96 in b. The net income for Winthrop Company increased between years. This increase was the combined result of an sales and a percentage in cost of goods sold. The cost of goods sold increased at a rate than the increase in sales, thus causing the percentage increase in gross profit to be the percentage increase in sales. than Current Position Analysis The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years: Current Year Previous Year Current assets: Cash $375,100 $311,600 Marketable securities 434,300 350,600 Accounts and notes receivable (net) Inventories 177,600 337,500 116,800 575,200 Prepaid expenses 431,500 367,800 Total current assets $2,256,000 $1,722,000 Current liabilities: Accounts and notes payable (short-term) Accrued liabilities $272,600 $287,000 197,400 123,000 $410,000 Total current liabilities $470,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio, Round ratios to one decimal place. Current Year Previous Year 1. Working capital 2. Current ratio Check My Work Total current liabilities $470,000 $410,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. Current Year Previous Year 1. Working capital 2. Current ratio 3. Quick ratio b. The liquidity of Nilo has from the preceding year to the current year. The working capital, current ratio, and quick ratio have all Most of these changes are the result of an in current assets relative to current liabilities. Accounts Receivable Analysis The following data are taken from the financial statements of Sigmon Inc. Terms of all sales are 2/10, n/45. 20Y3 20Y2 20Y1 Accounts receivable, end of year $725,000 $650,000 $600,000 Sales on account 5,637,500 4,687,500 a. For 20Y2 and 20Y3, determine (1) the accounts receivable turnover and (2) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. 20Y3 20Y2 1. Accounts receivable turnover 2. Number of days sales in receivables days days b. The collection of accounts receivable has in accounts receivable turnover and the This can be seen in both the in the collection period