Exercise 1
(a) Schellhammer Corporation reported the following amounts in 2013, 2014, and 2015.
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2013
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2014
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2015
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Current assets
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$269,300
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$298,923
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$323,160
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Current liabilities
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$161,100
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$169,150
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$183,420
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Total assets
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$526,600
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$620,030
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$618,230
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(b) Perform each of the three types of analysis on Schellhammer's current assets
Exercise 2 The following data are taken from the financial statements of Rainsberger Company.
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2015
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2014
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Accounts receivable (net), end of year
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$576,700
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$499,600
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Net sales on account
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4,048,600
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3,050,900
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Terms for all sales are 1/10, n/60.
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(a) Compute for each year the accounts receivable turnover. At the end of 2013, accounts receivable (net) was $507,300.
Exercise 3 The following data are from the income statements of Haskin Company.
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2015
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2014
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Sales
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$6,314,000
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$6,280,300
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Beginning inventory
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932,600
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837,400
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Purchases
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4,350,400
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4,615,200
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Ending inventory
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1,026,300
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932,600
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Compute for each year the inventory turnover.
Exercise 4 Guo Company has owners' equity of $381,900 and net income of $57,700. It has a payout ratio of 30% and a return on assets of 10%.
How much did Guo pay in cash dividends, and what were its average assets?
Exercise 5 Operating data for Navarro Corporation are presented below.
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2015
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2014
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Net sales
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$754,230
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$597,940
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Cost of goods sold
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469,900
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393,300
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Selling expenses
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123,710
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73,000
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Administrative expenses
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55,640
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54,760
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Income tax expense
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31,520
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21,450
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Net income
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73,460
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55,430
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Prepare a schedule showing a vertical analysis for 2015 and 2014.
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NAVARRO CORPORATION Condensed Income Statements For the Years Ended December 31
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2015
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2014
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Amount
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Percent
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Amount
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Percent
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Net sales
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$754,230
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%
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$597,940
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%
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Cost of goods sold
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469,900
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%
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393,300
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%
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Gross profit
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284,330
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%
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204,640
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%
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Selling expenses
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123,710
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%
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73,000
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%
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Administrative expenses
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55,640
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%
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54,760
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%
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Total operating expenses
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179,350
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%
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127,760
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%
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Income before income taxes
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104,980
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%
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76,880
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%
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Income taxes expense
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31,520
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%
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21,450
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%
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Net income
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$73,460
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%
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$55,430
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%
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Exercise 6 Suppose Nordstrom, Inc., which operates department stores in numerous states, has the following selected financial statement data for the year ending January 30, 2014.
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NORDSTORM, INC.
Balance Sheet (partial)
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(in millions)
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End-of-Year
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Beginning-of-Year
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Cash and cash equivalents
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$ 1,550
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$ 140
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Accounts receivable (net)
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3,968
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3,787
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Inventory
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1,751
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1,755
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Prepaid expenses
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172
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181
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Other current assets
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464
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410
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Total current assets
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$7,905
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$6,273
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Total current liabilities
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$3,927
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$3,122
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For the year, net sales were $16,103 and cost of goods sold was $10,390 (in millions).
Compute the four liquidity ratios at the end of the year.
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Current ratio
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:1
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Acid-test ratio
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:1
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Accounts receivable turnover
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times
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Inventory turnover
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times
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