QUESTION 1 -
PINE TREE COMPANY COMPARATIVE INCOME STATEMENTS FOR THE YEARS ENDED 12/31/14 AND 12/31/13
|
(in thousands)
|
|
2014
|
2013
|
|
Sales
|
1,969
|
1,718
|
|
Less: Cost of Goods Sold
|
1,091
|
886
|
|
Gross profit
|
878
|
832
|
|
Less: operating expenses
|
|
|
|
Wage expense
|
195
|
176
|
|
Depreciation expense
|
36
|
29
|
|
Rent expense
|
46
|
40
|
|
Miscellaneous expense
|
49
|
77
|
|
Total operating expenses
|
326
|
322
|
|
Operating income
|
552
|
510
|
|
Less: interest expense
|
19
|
66
|
|
Income before tax
|
533
|
444
|
|
Less: income tax expense
|
213
|
178
|
|
Net income
|
320
|
266
|
Requirements:
a. Convert the income statement above to common size format. Be sure to include all appropriate formulas.
Multiple Choice
Place an "X" next to the best answer for each item
b. What might best explain the change in gross profit % from 2013 to 2014?
1. Increased production costs
2. Decrease in volume (quantity) of goods sold
3. Increase in selling prices
4. Decreased raw materials costs
c. Which is the best explanation for the change in Net Income $ from 2013 to 2014?
1. Increase in sales
2. Decrease in production costs
3. Decrease in miscellaneous expense
4. Increase in income tax expense
d. Which is the best explanation for the change in operating income % from 2013 to 2014?
1. Increase in sales
2. Decrease in operating expenses
3. Increase in production costs
4. Increase in income tax expense
QUESTION 2 -
ABC COMPANY SELECTED FINANCIAL INFORMATION 2015, 2014, 2013
|
B
|
|
D
|
|
|
2015
|
|
2014
|
2013
|
|
Current assets
|
950,000
|
8
|
850,000
|
800,000
|
|
Current liabilities
|
525,000
|
9
|
450,000
|
500,000
|
|
Cash
|
210,000
|
10
|
260,000
|
245,000
|
|
Marketable securities
|
105,000
|
11
|
85,000
|
75,000
|
|
Inventory
|
375,000
|
12
|
275,000
|
325,000
|
|
Sales
|
1,850,000
|
13
|
2,100,000
|
1,750,000
|
|
Cost of Goods Sold
|
1,250,000
|
14
|
1,450,000
|
1,250,000
|
Assume:
1. ABC's current assets are comprised of cash, accounts receivable, marketable securities and inventory at the end of each year.
2. 10% of sales are for cash; the remainder of sales are on credit.
Requirements: Calculate each of the following ratios for 2014 and 2015 in the space below.
Be sure to show your work, including appropriate formulas.
a. Working capital
b. Current ratio
c. Quick (Acid Test) ratio
d. Inventory turnover
e. Days sales outstanding in receivables
Attachment:- Assignment.rar