Case Study: Company G. Comparative Income Statements
Company G
Comparative Income Statements
December 31, Years 12 and 11
Year 12
#N/A
#N/A
#N/A
Year 11
123,708,000
86,409,000
37,299,000
25,827,000
222000
2,316,000
28,365,000
#N/A
23,478,000
267000
2,163,000
25,908,000
11,391,000
2,349,000
-45,000
153,000
2,457,000
2,261,231
10.01%
-16.85%
7.07%
9.48%
19.85%
183000
384000
-201000
#N/A
117000
366000
-249000
11,142,000
66,000
18,000
48,000
2,309,231
66.41%
4.92%
-19.28%
20.73%
5,052,000
#N/A
4,419,000
6,723,000
633,000
1,676,231
14.32%
24.93%
-1,502,000
-126,000
-27.00%
-77.78%
NET SALES
Cost of Merchandise Sold
GROSS PROFIT
Operating Expenses:
Selling and Store Operating
Pre-Opening
General and Administrative
Total Operating Expenses
OPERATING INCOME
Interest Income (Expense):
Interest Income
Less: Interest Expense
Interest, net
EARNINGS BEFORE INCOME TAXES
Horizontal Analysis
Change
% Inc (Dec)
11,447,475
9.25%
6,729,245
7.79%
4,718,231
12.65%
Provision for Income Taxes
NET EARNINGS
Company G
Comparative Balance Sheets
December 31, Years 12 and 11
Year 12
ASSETS
Current Assets:
Cash and Cash Equivalents
Short-Term Investments
Year 11
#N/A
36,000
5,562,000
162,000
Accounts Receivable, net
Merchandise Inventory
Other Current Assets
Total Current Assets
Property and Equipment, at cost:
Land
Buildings
Furniture, Fixtures and Equipment
Less Accumulated Depreciation
Net Property and Equipment
TOTAL ASSETS
LIABILITIES
Current Liabilities:
Accounts and Notes Payable
Accrued Salaries and Related Expense
Sales and Income Taxes Payable
Other Accrued Expenses
Total Current Liabilities
Long-Term Liabilities:
Notes Payable
Other Long-Term Liabilities
Total Long-Term Liabilities
Total Liabilities
STOCKHOLDERS' EQUITY:
Common Stock ($1.00 Par)
Paid In Capital
Retained Earnings
Treasury Stock (2,000,000 shares, at cost)
Total Stockholders' Equity
TOTAL LIABILITIES and EQUITY
2,638,000
20,503,000
688000
#N/A
2,686,000
15,534,000
393000
24,337,000
-48,000
4,969,000
295,000
3,588,000
-1.79%
31.99%
75.06%
14.74%
12,843,000
24,933,000
9,411,000
47,187,000
8,235,000
38,952,000
#N/A
11,484,000
21,939,000
7,860,000
41,283,000
6,360,000
34,923,000
59,260,000
1,359,000
2,994,000
1,551,000
5,904,000
1,875,000
4,029,000
7,617,000
11.83%
13.65%
19.73%
14.30%
29.48%
11.54%
12.85%
#N/A
1,869,000
1,233,000
2,619,000
#N/A
7,938,000
1,656,000
1,290,000
2,166,000
13,050,000
1,912,000
213,000
-57,000
453,000
2,521,000
24.09%
12.86%
-4.42%
20.91%
19.32%
3,051,000
1,134,000
4,185,000
#N/A
2,889,000
858000
3747000
16,797,000
162,000
276,000
438,000
2,959,000
5.61%
32.17%
11.69%
17.62%
10,000,000
13,530,000
#N/A
-4,620,000
#N/A
#N/A
10,000,000
12,501,000
19,962,000
0
42,463,000
59,260,000
0
1,029,000
8,249,000
-4,620,000
4,658,000
7,617,000
0.00%
8.23%
41.32%
0
10.97%
12.85%
The below rules are from Financial Accounting Principles , Wild, 18th ed.
This column is not graded. It is provided for students to use as they analyze the ratios for the essay. ↑↑↑
Apply the above mathematics rules to your work in this task. Enter --- in the answer field when appropriate.
Ratio Analysis:
Company G
Year 12
Year 11
Quartile
Industry
Data
Select Strength,
Weakness, or
No Concern
Ratio:
Current Ratio
Acid-Test Ratio
Inventory Turnover
1.86
3.1
2.1
1.4
Weakness
0.43
0.64
1.6
0.9
0.6
Weakness
5.2
6.1
13
10.2
8.3
Weakness
1.79
Accounts Receivable Turnover
30.5
(This formula in Horngren only includes credit sales)
Day's Sales in receivables
12.0
(Horngren reference includes all sales. Modify the formula to use only credit sales. Cash sales are already collected.)
Debt Ratio
29.54%
32.2
35.2
33.5
31.4
Weakness
11.1
15.1
13.5
11.3
No Concern
28.34%
30.0%
45.0%
66.0%
Strength
Strength
Times-interest-earned ratio
35.55
31.12
29.7
17.2
8.1
Rate of return on net sales
6.21%
5.43%
7.55%
6.12%
4.20%
Strength
Rate of return on total assets
13.32%
12.30%
17.20%
12.30%
8.60%
Strength
Rate of return on common stockholder's equity
18.75%
20.20%
18.60%
16.30%
12.80%
No Concern
$1.05
$0.672
0.9
0.87
0.83
$5.21
7
6.3
5.5
Earnings per share of common stock
Price earnings ratio
$5.48
Strength
No Concern
Book value per share of common stock
$5.89
$4.25
6
5.5
4.9
Strength
Comparative Income Statements
December 31, Years 12 and 11
Year 12
#N/A
#N/A
#N/A
Year 11
123,708,000
86,409,000
37,299,000
25,827,000
222000
2,316,000
28,365,000
#N/A
23,478,000
267000
2,163,000
25,908,000
11,391,000
2,349,000
-45,000
153,000
2,457,000
2,261,231
10.01%
-16.85%
7.07%
9.48%
19.85%
183000
384000
-201000
#N/A
117000
366000
-249000
11,142,000
66,000
18,000
48,000
2,309,231
66.41%
4.92%
-19.28%
20.73%
5,052,000
#N/A
4,419,000
6,723,000
633,000
1,676,231
14.32%
24.93%
-1,502,000
-126,000
-27.00%
-77.78%
NET SALES
Cost of Merchandise Sold
GROSS PROFIT
Operating Expenses:
Selling and Store Operating
Pre-Opening
General and Administrative
Total Operating Expenses
OPERATING INCOME
Interest Income (Expense):
Interest Income
Less: Interest Expense
Interest, net
EARNINGS BEFORE INCOME TAXES
Horizontal Analysis
Change
% Inc (Dec)
11,447,475
9.25%
6,729,245
7.79%
4,718,231
12.65%
Provision for Income Taxes
NET EARNINGS
Company G
Comparative Balance Sheets
December 31, Years 12 and 11
Year 12
ASSETS
Current Assets:
Cash and Cash Equivalents
Short-Term Investments
Year 11
#N/A
36,000
5,562,000
162,000
Accounts Receivable, net
Merchandise Inventory
Other Current Assets
Total Current Assets
Property and Equipment, at cost:
Land
Buildings
Furniture, Fixtures and Equipment
Less Accumulated Depreciation
Net Property and Equipment
TOTAL ASSETS
LIABILITIES
Current Liabilities:
Accounts and Notes Payable
Accrued Salaries and Related Expense
Sales and Income Taxes Payable
Other Accrued Expenses
Total Current Liabilities
Long-Term Liabilities:
Notes Payable
Other Long-Term Liabilities
Total Long-Term Liabilities
Total Liabilities
STOCKHOLDERS' EQUITY:
Common Stock ($1.00 Par)
Paid In Capital
Retained Earnings
Treasury Stock (2,000,000 shares, at cost)
Total Stockholders' Equity
TOTAL LIABILITIES and EQUITY
2,638,000
20,503,000
688000
#N/A
2,686,000
15,534,000
393000
24,337,000
-48,000
4,969,000
295,000
3,588,000
-1.79%
31.99%
75.06%
14.74%
12,843,000
24,933,000
9,411,000
47,187,000
8,235,000
38,952,000
#N/A
11,484,000
21,939,000
7,860,000
41,283,000
6,360,000
34,923,000
59,260,000
1,359,000
2,994,000
1,551,000
5,904,000
1,875,000
4,029,000
7,617,000
11.83%
13.65%
19.73%
14.30%
29.48%
11.54%
12.85%
#N/A
1,869,000
1,233,000
2,619,000
#N/A
7,938,000
1,656,000
1,290,000
2,166,000
13,050,000
1,912,000
213,000
-57,000
453,000
2,521,000
24.09%
12.86%
-4.42%
20.91%
19.32%
3,051,000
1,134,000
4,185,000
#N/A
2,889,000
858000
3747000
16,797,000
162,000
276,000
438,000
2,959,000
5.61%
32.17%
11.69%
17.62%
10,000,000
13,530,000
#N/A
-4,620,000
#N/A
#N/A
10,000,000
12,501,000
19,962,000
0
42,463,000
59,260,000
0
1,029,000
8,249,000
-4,620,000
4,658,000
7,617,000
0.00%
8.23%
41.32%
0
10.97%
12.85%
The below rules are from Financial Accounting Principles , Wild, 18th ed.
This column is not graded. It is provided for students to use as they analyze the ratios for the essay. ↑↑↑
Apply the above mathematics rules to your work in this task. Enter --- in the answer field when appropriate.
Ratio Analysis:
Company G
Year 12
Year 11
Quartile
Industry
Data
Select Strength,
Weakness, or
No Concern
Ratio:
Current Ratio
Acid-Test Ratio
Inventory Turnover
1.86
3.1
2.1
1.4
Weakness
0.43
0.64
1.6
0.9
0.6
Weakness
5.2
6.1
13
10.2
8.3
Weakness
1.79
Accounts Receivable Turnover
30.5
(This formula in Horngren only includes credit sales)
Day's Sales in receivables
12.0
(Horngren reference includes all sales. Modify the formula to use only credit sales. Cash sales are already collected.)
Debt Ratio
29.54%
32.2
35.2
33.5
31.4
Weakness
11.1
15.1
13.5
11.3
No Concern
28.34%
30.0%
45.0%
66.0%
Strength
Strength
Times-interest-earned ratio
35.55
31.12
29.7
17.2
8.1
Rate of return on net sales
6.21%
5.43%
7.55%
6.12%
4.20%
Strength
Rate of return on total assets
13.32%
12.30%
17.20%
12.30%
8.60%
Strength
Rate of return on common stockholder's equity
18.75%
20.20%
18.60%
16.30%
12.80%
No Concern
$1.05
$0.672
0.9
0.87
0.83
$5.21
7
6.3
5.5
Earnings per share of common stock
Price earnings ratio
$5.48
Strength
No Concern
Book value per share of common stock
$5.89
$4.25
6
5.5
4.9
Strength