5 Managerial Accounting questions due Thursday, August 21 at 6pm PDT!

 

 

 

Exercise 1

 

Identify each of the following as (a) an underlying concept, (b) an objective of financial statement analysis, (c) a standard for financial statement analysis, (d) a source of information for financial statement analysis, or an executive compensation issue:

 

  1.  Past Ratios of the company

  2. Linking performance to shareholder value

  3. Average ratios of other companies in the same industry

  4. Assessment of the future potential of an investment

  5. Timeliness

  6. Interim financial statements

  7. SEC Form 10-K

  8. Assessment of rick

  9. Comparability

  10. A company’s annual report

     

    Exercise 7

    Elm Company had total assets of $640,000 in 2012. $680,000 in 2013, and $760.000 in 2014.  In 2013, Elm had net income of $77,112 on revenues of $1,224,000.  In 2014, it had net income of $98,952 on revenues of $1,596,000.  Compute the profit margin, asset turnover, and return on assets for 2013 and 2014.  Comment on the apparent cause of the increase or decrease in profitability.  (Round to one decimal place).

     

    Exercise 12

    Components of Van Corporation’s income statement for the year ended December 31, 2014 follow.  Recast the income statement in multiple step form, including allocating income taxes to appropriate items (assume a 30 percent income tax rate) and showing earnings per share figures (200,000 shares outstanding).  (Round earnings per share figures to the nearest cent.)

     

                            Sales                                                                            $1,110,000

                            Cost of goods sold                                                      (550,000)

                            Operating expenses                                                    (225,000)

                            Restructuring                                                             (110,000)

                            Total income taxes expense for period                       (179,000)

                            Income from discontinued operations                                    160,000

                            Gain on disposal of discontinued operations             140,000

                            Extraordinary gain                                                        72,000

                            Net income                                                                  $417,900

                            Earnings per share                                                       $      2.09

     

    Problem 1

    Obras Corporation’s condensed comparative income statements and comparative balance sheets for 2014 and 2013 follow.

     

    Obras Corporation

    Comparative Income Statements

    For the Years Ended December 31, 2014 and 2013

                                                                                        2014                            2013

    Net sales                                                                      $3,276,800                  $3,146,400

    Cost of goods sold                                                      2,088,800                   2,008,400

    Gross margin                                                               $1,188,000                  $1,138,000

    Operating expenses:

                Selling expenses                                               $476,800                    $518,000

                Administrative expenses                                  447,200                       423,200

                    Total operating expenses                             $924,000                     $941,200

    Income from operations                                              $264,000                     $196,800

    Interest expense                                                               65,600                         39,200

    Interest before income taxes                                       $198,400                     $157,600

    Income taxes expense                                                     62,400                          56,800

    Net income                                                                  $136,000                     $100,800

    Earnings per share                                                       $     3.40                      $      2.52

     

     

    Obras Corporation

    Comparative Balance Sheets

    December 31, 2014 and 2013

                                                                                        2014                            2013

                                                                Assets

    Cash                                                                            $81,200                       $40,800

    Accounts receivable (net)                                           235,600                       229,200

    Inventory                                                                    574,800                       594,800          

    Property, plants and equipment (net)                          750,000                       720,000

    Total assets                                                             $1,641,600                  $1,584,800

     

                                                                Liabilities and Stockholders’ Equity

    Accounts payable                                                      $267,000                       $477,200

    Notes payable (short-term)                                         200,000                       400,000

    Bonds payable                                                            400,000                      

    Common stock, $10 par value                        400,000                       400,000

    Retained earnings                                                       374,000                       307,600

    Total liabilities and stockholders’ equity                 $ 1,641,600                 $1,584,800        

     

    REQUIRED:

 

  1.  Prepare schedules showing the amount and percentage changes from 2013 to 2014 for the comparative income statements and the balance sheets (Round to the one decimal place.)

  2. Prepare common-size income statements and balance sheets for 2013 and 2014.  (Round to the one decimal place).

  3. Comment on the results in requirements 1 and 2 by identifying favorable and unfavorable changes in the components and composition of the statements.

     

     

    Problem 3

    Tuxedo Corporation’s condensed comparative income statements and balance sheets follow.  All figures are given in thousands of dollars, except for earnings per share.

     

    Tuxedo Corporation

    Comparative Income Statements

    For the Years Ended December 31, 2014 and 2013 

                                                                                                    2014                            2013

    Net sales                                                                                  $800,400                     $742,600       

    Cost of goods sold                                                                   454,100                       396,200

    Gross margin                                                                           $346,300                     $346,400

    Operating expenses: 

       Selling expenses                                                                   $130,100                     $104,600

       Administrative expenses                                                        140,300                       115,500

          Total operating expenses                                                   $270,400                     $220,100

    Income from operations                                                          $  75,900                     $126,300

    Interest expense                                                                          25,000                         20,000

    Income before income taxes                                                   $  50,900                     $106,300

    Income taxes expense                                                                 14,000                         35,000

    Net income                                                                              $  36,900                     $  71,300

    Earnings per share                                                                   $     2.46                      $      4.76

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