See attached file.
2019 2018 2017 2016 2015 Sales $ 493,866 $ 320,692 $ 265,035 $ 187,968 $ 142,400 Cost of goods sold 249,483 162,096 135,868 95,934 71,200 Accounts receivable 23,953 18,760 18,128 10,959 9,726 1. Compute trend percents for the above accounts, using 2015 as the base year. Trend Percent for Net Sales: Choose Numerator: / Choose Denominator: / = Trend percent 2019: / = % 2018: / = % 2017: / = % 2016: / = % Trend Percent for Cost of Goods Sold: Choose Numerator: / Choose Denominator: / = Trend percent 2019: / = % 2018: / = % 2017: / = % 2016: / = % Trend Percent for Accounts Receivables: Choose Numerator: / Choose Denominator: / = Trend percent 2019: / = % 2018: / = % 2017: / = % 2016: / = % 2. Express the following comparative income statements in common-size percents. Using the common-size percentages, which item is most responsible for the decline in net income? GOMEZ CORPORATION Comparative Income Statements For Years Ended December 31 Current Year Prior Year $ % $ % Sales $740,000 $640,000 Cost of goods sold 570,800 284,400 Gross profit 169,200 355,600 Operating expenses 129,200 252,800 Net income $40,000 $102,800 3. Common-size and trend percents for Rustynail Company's sales, cost of goods sold, and expenses follow. Common-Size Percents Trend Percents Current Yr 1 Yr Ago 2 Yrs Ago Current Yr 1 Yr Ago 2 Yrs Ago Sales 100.0 % 100.0 % 100.0 % 103.7 % 102.5 % 100.0 % Cost of goods sold 63.4 61.2 58.0 113.4 108.2 100.0 Total expenses 14.2 13.7 14.0 105.2 100.3 100.0 Determine the net income for the following years. Did the net income increase, decrease, or remain unchanged in this three-year period? Current Yr 1 Yr Ago 2 Yrs Ago Sales $100,000 Cost of Goods Sold 58,000 Total Expenses 14,000 Net Income $28,000 4. Simon Company's year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 28,604 $ 32,124 $ 33,804 Accounts receivable, net 78,838 57,364 45,982 Merchandise inventory 102,190 74,286 48,976 Prepaid expenses 8,850 8,519 3,870 Plant assets, net 256,818 237,448 212,268 Total assets $ 475,300 $ 409,741 $ 344,900 Liabilities and Equity Accounts payable $ 120,717 $ 69,246 $ 45,072 Long-term notes payable secured by mortgages on plant assets 92,037 92,356 76,985 Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 99,046 84,639 59,343 Total liabilities and equity $ 475,300 $ 409,741 $ 344,900 1. Express the balance sheets in common-size percent. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.) 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable? 3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favorable or unfavorable? SIMON COMPANY Common-Size Comparative Balance Sheets December 31 Current Year 1 Year Ago 2 Years Ago Assets Cash % % % Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets % % % Liabilities and Equity Accounts payable % % % Long-term notes payable secured by mortgages on plant assets Common stock, $10 par Retained earnings Total liabilities and equity % % % The following apply to 5-8 5. Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 31,551 $ 36,880 $ 37,656 Accounts receivable, net 89,600 62,100 50,100 Merchandise inventory 115,000 82,000 52,000 Prepaid expenses 10,161 9,681 4,184 Plant assets, net 283,157 265,778 232,660 Total assets $ 529,469 $ 456,439 $ 376,600 Liabilities and Equity Accounts payable $ 133,156 $ 77,910 $ 50,208 Long-term notes payable secured by mortgages on plant assets 100,536 106,031 84,061 Common stock, $10 par value 162,500 162,500 162,500 Retained earnings 133,277 109,998 79,831 Total liabilities and equity $ 529,469 $ 456,439 $ 376,600 The company’s income statements for the Current Year and 1 Year Ago, follow. Assume that all sales are on credit: For Year Ended December 31 Current Yr 1 Yr Ago Sales $ 688,310 $ 543,162 Cost of goods sold $ 419,869 $ 353,055 Other operating expenses 213,376 137,420 Interest expense 11,701 12,493 Income tax expense 8,948 8,147 Total costs and expenses 653,894 511,115 Net income $ 34,416 $ 32,047 Earnings per share $ 2.12 $ 1.97 (1-a) Compute days' sales uncollected. (1-b) For each ratio, determine if it improved or worsened in the current year. Days' Sales Uncollected Choose Numerator: / Choose Denominator: x Days = Days' Sales Uncollected / x = Days' Sales Uncollected Current Yr: / x = 0 days 1 Yr Ago: / x = 0 days 6. (2-a) Compute accounts receivable turnover. (2-b) For each ratio, determine if it improved or worsened in the current year. Accounts Receivable Turnover Choose Numerator: / Choose Denominator: = Accounts Receivable Turnover / = Accounts receivable turnover Current Yr: / = times 1 Yr Ago: / = times 7. (3-a) Compute inventory turnover. (3-b) For each ratio, determine if it improved or worsened in the current year. Inventory Turnover Choose Numerator: / Choose Denominator: = Inventory Turnover / = Inventory turnover Current Yr: / = times 1 Yr Ago: / = times 8. (4-a) Compute days' sales in inventory. (4-b) For each ratio, determine if it improved or worsened in the current year. Days Sales Turnover Choose Numerator: / Choose Denominator: = Days Sales Turnover / = Days Sales turnover Current Yr: / = times 1 Yr Ago: / = times The following apply to 9-11 Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 32,178 $ 37,233 $ 39,180 Accounts receivable, net 95,146 64,493 52,752 Merchandise inventory 116,074 87,859 56,198 Prepaid expenses 10,781 10,173 4,311 Plant assets, net 296,719 275,154 235,559 Total assets $ 550,898 $ 474,912 $ 388,000 Liabilities and Equity Accounts payable $ 141,289 $ 80,260 $ 50,704 Long-term notes payable secured by mortgages on plant assets 101,497 112,507 84,033 Common stock, $10 par value 162,500 162,500 162,500 Retained earnings 145,612 119,645 90,763 Total liabilities and equity $ 550,898 $ 474,912 $ 388,000 The company’s income statements for the Current Year and 1 Year Ago, follow. For Year Ended December 31 Current Yr 1 Yr Ago Sales $ 716,167 $ 565,145 Cost of goods sold $ 436,862 $ 367,344 Other operating expenses 222,012 142,982 Interest expense 12,175 12,998 Income tax expense 9,310 8,477 Total costs and expenses