180 outof180points(100%) - mgmt-026€¦ · • 180 outof180points ... i current assets .i~ current...

• 180 outof180points (100%)

Simon Company's year-end balance sheets follow.

At December 31 2014 2013 2012 Assets Cash $ 31,600 $ 35,500 $ 37,400 Accounts receivable, net 88,500 61,000 51,000 Merchandise inventory 112,000 83,600 52,500 Prepaid expenses 10,400 9,450 5,000

Plant assets, net 278,000 257,000 234,000

Total assets $ 520,500 $446,550 $ 379,900

Liabilities and Equity Accounts payable $ 129,200 $ 73,000 $ 50,000 Long-term notes payable secured by mortgages on plant assets 96,000 100,000 82,200

Common stock, $10 par value 162,000 162,000 162,000

Retained earnings 133,300 111,550 85,700

Total liabilities and equity $ 520,500 $446,550 $ 379,900

The company's income statements forthe y ears ended December 31, 2014 and 2013, follow.

For Year Ended December 31 Sales Cost of goods sold

Other operating expenses Interest expense Income taxes

Total costs and expenses

Net income

Earnings per share

2014 $675,000

$398,250

202,500 12,300 9,550

622,600

$ 52.400

$ 3.23

2013 $630,000

$390,600 144,900 13,000

8,925

557,425

$ 72,575

$ 4.48

Evaluate the company's efficiency and profitabili~/ by computing the following for 2014 and 2013.

1 . award: 10 out of 10.00

·· ·· ·· ·· ·· ·· ··l>oinu;- ·· (1)Profit margin ratio.

Choose Numerator:

Net income ./ 1201 4 $ 52,400./

201 3 $ 72,575./

Profit Margin Ratio

Choose Denominator: Profit Margin Ratio

Net sales ./ ± "'"''"'" ""' .$ 675,000./ 7.8%

$ 630,000./ 11.5%

g.vard:

2 10 out of . 10.00

·· · · · · · ·points · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · .. (2)Total asset turnover.

Choose Numerator: ----Net sales ./

Tota I Asset Turnover

c:noose Denominator: Total Asset Turnover

- Average total assets ./ = I Total asset turnover

$ 483,525./ ~ 1.4 times 2014

2013

$

$

675,000./ I

630,000./ I $ 413,225./ = 1.5 times

3. S"Nflrd:

10 out of 10.00

(3)Return on total assets.

Choose Numerator: --.......

Return On Total Assets

Choose Denominator: ..--"'I

2014

2013

Net income

52,400./

72,575./

Average total assets ./

$ 483,525./

$ 413,225./

Return On Total Assets

= Return on total assets --1--

= 10.8%

= 17.6%

{The foUovdng inforn1ation applies to the questions displayed belov1.]



Plant assets, net 265,733 247,310 219,716

Total assets $ 502,234 $432,960 $ 360,800

Liabilrties and Equity Accounts payable $ 126,307 $ 73,1 70 $ 47,1 49 Long-term notes payable secured by mortgages on plant assets 93,476 102,568 78,939



Total liabilities and equity $ 502,234 $432,960 $ 360,800

The company's income statements for the years ended December 31, 2014 and 2013, follow.

For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income taxes


Net income

Earnings per share

2014 $652,904

$398,271 202,400

11,099 8,488

620,258

$ 32,646

$ 2.01

2013 $515,222

$334,894 130,351

11,850 7,728

484,823

$ 30,399

$ 1.87

Calculate the company's long-term risk and capital structure positions at the end of 2014 and 2013 by computing tl1e following ratios.

4. SW91'd: 10 out of 10.00

(1) Debt and equity ratios.

Choose Numerator:

Total liabilities

201 4: $

1201 3: T$

Choose Numerator:

Total equi~/

2014: $

1201 3: $

I

v'j I

219,783v' I

175,738v' I

I

v'j I

282,451v' I

257,222v' I

Debt Ratio

Choose Denominator: = Debt Ratio

JTotal assets v' = Debt ratio

$ 502,234v' = 43.8%

1 $ 432.960v' = 40.6%

Egui!}! Ratio ~

Choose Denominator: = Equity Ratio

JTotal assets v' = Equity ratio

$ 502,234v' = 56.2%

$ 432,960v' = 59.4% - -

SW91'd:

5 10 out of . 10.00

·····························points···· (2)Debt-to-eQuity ratio.

Debt-T0-Eaui1V Ratio

Choose Numerator: I Choose Denominator: ---~~ ~~~· 1-----11Total liabilities -10 Total eQui~/ 201 4:

2013:

$ 219.783_.I I $

$ 175,738_.I $

v'.l = 282,451_.I =

257,222_.I =

l Debt-To.Equity Ratio

Debt-to-eQui~/ ratio

0.78 to 1

0.68 to 1

6. award: 10 out of 10.00

(3) Times interest earned.

Choose Numerator:

Income before interest and inc tax

1201 4: $

12013: $

Tines Interest Earned

Choose Denominator: Tmes Interest Earned

Interest expense

$

$

./ = Times interest earned +--~1--

11,099./ = 4. 7 times

11,850./ = 4.2 times

award:

7 10 out of • 10.00 · .................. pomts ............................................................................................... .



Plant assets, net 286,105 261,635 236,761

Total assets $526,566 $453,936 $ 386,000

Liabilrties and Equity Accounts payable $ 131,115 $ 78,249 $ 50,952 Long-term notes payable secured by mortgages on plant assets 100,974 104,405 87,012



Total liabilities and equi~/ $526,566 $453,936 $ 386,000

(1)Compute the current ratio forthe year ended 20 14, 2013, and 2012.

Current Ratio

Choose Numerator: I Choose Denominator: = Current Ratio

I Current assets .I~ Current liabilities .I~ Current ratio -

2014: $ 240,461./ I $ 131, 115./ = 1.83 to 1

2013: $ 192,301./ I $ 78,249./ = 2.46 to 1

201 2. $ 1 49,239./ I $ 50,952./ = 2.93 to 1

(2)Cornpute the acid-test ratio for the year ended 2014, 2013, and 2012.

Acid-Test Ratio

ClKlose Numerator: I ClKlose Denominator: Acid-Test Ratio ~~....-~..-~~~

Gash

2014: $

2013: $

2012:._J$

./ + Short-term investment~./ + Current receivables ./

31,067.,I + •$ 0 + $ 88,242.,I +---1--

35, 225 .,I + $ 0 + $ 62,916.,I

38,596.,I~ $ 0 + $ 50,952.,I

I Current liabilities ./ = Acid-test ratio

$ 131, 115.,I = 0.91 to 1

$ 78,249.,I = 1.25 to 1

$ 50,952.,I = 1.76 to 1 I

sward:

8 10 out of • 10.00

.......................... points···· Simon Company's year-end balance sheets follow.

At December 31 2014 2013 2012 Assets Cash $ 25,351 $ 29,930 $ 30,560 Accounts receivable, net 74,211 51,859 41, 158 Merchandise inventory 94,230 67,842 43,833 Prepaid expenses 8,327 7,701 3,361 Plant assets, net 227,566 213,086 192,888

Total assets $429,685 $370,418 $311,800

Liabilities and Equity Accounts payable $103,782 $ 63,853 $ 41,569 Long-term notes payable secured by mortgages on plant assets 79,973 86,048 68,908

Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 82,430 57,017 37,823

Total liabilities and equity $429,685 $370,418 $311,800

Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final answers to 1 decimal place.)

Cash

Accounts receivable, net

Merchandise inventor/

Prepaid expenses

Plant assets, net

Total assets

Accounts payable

SIMON COMPANY

Conmon-Size Comparative Balance Sheets

December 31, 2012-2014

2014 2013

59%.I 8.1%v/

17.3%.I 14.0%.I

21.9%.I 18.3%v/

1.9%v/ 2.1%v/

53 0%.I 57 5%.I

100.0%.I 100.0%.I

24.2%.I 17.2%.I

Long-term notes payable secured by 18.6%.I 23.2%.I I mortgages on plant assets

Common stock, $10 par 38.1%.I 44.1%.I

BRetained earnings 19.2%.I 15.4%v/

Total liabilities and equ1~1 100.0%.I 100.0%.I

2012

98%v/

13.2%.I

14.1%.I

1.1%v/

61 9%.,J

100.0%.I

13.3%v/

22 1%.I

52.4%.I

12.1%.I

100.0%.I

Simon Company's year-end balance sheets follow .

At December 31 2014 2013 2012 Assets Cash $ 25,226 $ 29,487 $ 30,107 Accounts receivable, net 73, 112 51,602 40, 143 Merchandise inventor/ 91,924 68,188 43, 184 Prepaid expenses 8,1 24 7,740 3,345

Plant assets, net 224,936 207,916 184,321

Total assets $423,322 $364,933 $ 301,100

Liabilities and Equity Accounts payable $106,461 $ 62,290 $ 40, 143 Long-term notes payable secured by mortgages on plant assets 80,380 84,774 67,209



Total liabilities and equi~/ $423,322 $364,933 $ 301,100

The company's income statements for the years ended December 31, 2014 and 2013, follow. Assume that all sales are on credit:

For Year Ended December 31 Sales Cost of goods sold

Other operating expenses Interest expense Income taxes


Net income

Earnings per share

2014 $550,319

$335,695

170,599 9,355 7,154

522,803

$ 27,516

$ 1.69

2013 $434,270

$282,276

109,870 9,988 6,514

408,648

$ 25,622

$ 1.58

9. sward: 10 out of 10.00 · .......... " points .............................................................................. · .................................................................................................... .

(1} Compute days' sales uncollected. (Use 365 days a year.)

Dais' Sales Uncollected

Choose Numerator: I Choose Denominator: x Days = Days' Sales Uncollected .. .. [ Accounts receivable ./ I JNetsales ./ x 365./ = Days' Sales Uncollected

- - -201 4: $ 73, 112./ I $ 550,319./ x 365./ = 48.5 days

-2013: $ 51,602./ I $ 434,270./ x 365./ = 43.4 days

sward:

10 10 out of . 10.00 ................... points ..................................................................................................................... .

(2) Compute accounts receivable turnover.

Choose Nwnerator: ,... ____ _ 2014:

2013:

Net sales

$

$

.... --550,319./

434,270./

Accounts Receivable Turnover

Choose Denominator:

Aver age accounts receivable, net ./

$

$

62,357./

45,873./

Accounts Receivable Turnover

~ccounts receivable turnover

= -1- 8.8 times

= 9.5 times

award:

11 10 out of . 10.00

........................... polnrs ................................................................................................................................ .. (3) Compute inventory turnover.

Inventor.! Turnover ~

Choose Numerator: I uchoose Denominator: Cost of goods sold ./ I 1 Ave rage inventory ./ -

f 2014: $ 335,695./ I !$ 80,056./

' $ ,2013: $ 282,276./ I 55,686./

~ Inventory Turnover

= Inventory turnover

= 4.2 times - --= 5.1 times -

sward:

12 10 out of . 10.00

··················po!nnr ······················································································································ (4) Compute days' sales in inventor/ . (Use 365 days a year.)

Days' Sales In Inventory

Choose Numerator: Choose Denominator: x

Ending inventory ./ Cost of goods so Id ./ x 201 4: $ 91,924./ $ 335,695./ x 2013: $ 68,188./ $ 282,276./ x

Days Days' Sales In Inventory

365./ = Days' sales in inventory

365./ = 99.9 days

365./ = 88.2 days

13. award: 10 out of 10.00

· ·· ·· ·· ·· ····poifits .... The following information for Tide Corporation:

($thousands) Net sales Cost of goods sold

2013 $801,810

392,887

2012 $453,000

134,088

Determine the 2012 and 2013 common-size percents for cost of goods sold using net sales as the base.

I'----,

2013:

2012:

Coomon-Size Percent for Cost of Goods Sold usina Net Sales as the base:

Choose Numerator: I Choose Denominator:

Analysis Period Cost of Goods Sold

$ 392,887./

$ 134,088./

Analysis Period Net Sales ./ = $ 801,810./ = $ 453,000./ =

Common-Size Percents --1

49.0%

29.6%

. ,,... I Question # 14 (of 18) · I next ~

porn ts 2015 2014 2013 2012 2011

Sales $ 533,786 $ 348,880 $ 277,992 $ 193,050 $ 143,000 Cost of goods sold 274,681 179,679 145,076 100,156 72,930 Accounts receivable 25,942 20,375 19,015 11,293 9,767

Compute trend percents for the above accounts, using 2011 as the base year.

Trend Percent for Net Sales:

Choose Numerator: Choose Denominator:

Analysis period net sales Base year net sales ./ = Sales

2015: $ $ 143,000./ 4- 373%

2014: $ 348,880./ $ 143,000./ 244%

2013: $ 277,992./ I $ 143,000./ 194%

2012: $ 193,050./ I .$ 143,000./ = 135%

Trend Percent for Cost of Goods Sold: Choose Numerator: I Choose Denominator:

Analysis period cost of goods sold ./ I Base year cost of goods sold ./ = Cost of goods sold

2015: $ 274.681./ I $ 72,930./ 4- 377%

2014: $ 179,679./ $ 72,930./ 246%

2013: $ 145,076./ I $ 72,930./ 199%

2012: $ 100,156./ I .$ 72,930./ = 137%

Trend Percenlfor Accounts Receivables:

Choose Numerator: Choose Denominator:

Analysis period accounts receivable Base year accounts receivable ./ = Accounts receivable

2015: $ 25,942./ $ 9,767./ 4- 266%

2014: $ 20,375./ $ 9,767./ 209%

2013: $ 19,015./ I $ 9,767./ 195%

2012: $ 11,293./ I .$ 9,767./ = 116%

15. sward: 10 out of 10.00

·························poii'its·· Common-size and trend percents for Rus~/nail Company's sales, cost of goods sold, and expenses follow.

Sales Cost of goods sold Total expenses

Common-Size Percents 2014 2013 2012

100.0% 100.0% 100.0% 63.4 61.2 56.7 14.3 13.8 14.1

Trend Percents 2014 2013 2012

104.4% 103.2% 100.0% 116.7 111.4 100.0 105.9 101.0 100.0

Determine the net income for the following years. (Enter all amounts as positive values.)

2014 201J 2012

Sales $ 104,400.,/ $ 103,200.,/ $ 100,000

66,169.,/ 63, 164.,/ 56,700 Cost of Goods Sold

Total Expenses

Netlncome

14,932.,/ 14,241.,/ 14,1001

1$ I

23,299 $ 25,795 1$

Did the net income increase, decrease, or remain unchanged in this three-year period?

0 Remained unchanged 0 Net income increased ® Net income decreased

29,200 I

sward:

16 10 out of . 10.00 .................. · poiilts ................................................................................. ..

Which of the following items are part of financial reporting but are not included as part of generalpurpose financial statements? (Select all that apply .)

~ Stock price information and analysis

0 Statement of cash flovts

~ tv1anagement discussion and analysis of financial performance

0 Income statement

~ C-Ompany nev1s releases

0 Balance sh-eet

D Financial statement notes 0 Statement of sh.areholders' equity

~ Prospectus

17. award: 10 out of 10.00

· ············poii'its ··············································································································································· The following information is for Tide Corporation:

($ thousands) Net sales Cost of goods sold

2013 $801,810

392,887

2012 $453,000

134,088

Determine the 2012 and 2013 trend percents for net sales using 2012 as the base year.

I'----,

2013:

201 2:

Trend Percentfor Net Sales:

Choose Numerator: I Choose Denominator: "'"'--Analysis Period Net Sales .I Base year Net Sales .I = $ 801,810./ $ 453,000./ = .,_ $ 453,000./ $ 453,000./ = ----

Trend Percent

177.0%

100.0%

award:

18 10 out of . 10.00 ............. poir'its ........................................................................... ..

Compute t11e annual dollar changes and percent c11anges for eac11 of the following accounts. (Decreases should have a minus sign in front of them. Round Percent Change to one decimal place.)

Short-term investments Accounts receivable Notes payable

--Percent Change =

2013 $374,634

97,364 0

f. Short-term investments $

-!

Accounts receivable ' -1 Notes payable

2012 $234,000

101,000 88,000

Percent Challlll!

60.1%./

(36)%v'

(1 00.0)%./

180 outof180points(100%) - mgmt-026€¦ · • 180 outof180points ... i current assets .i~ current...

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