Help 4

Problems are found in your text.

1) Problem P11-55B, page 657 of your text

a) (50 points) Skeleton Income Statement:

Midler Cosmetics, Inc.
Income Statement
Year Ended December 31, 2014
Revenues:
Expenses and losses:
Total expenses and losses		564,150
Income from continuing operations
Income from discontinued operations,
$20,000, less income tax, $6,100
Income before extraordinary item
Extraordinary loss, $14,000,
less income tax savings of $4,300
Net income		$ 94,450

.

Earnings per share:
Income from continuing operations
Income from discontinued operations ($13,900 / 31,000)
Income before extraordinary item
Extraordinary loss
Net income	$2.99

Req. 2

The company hoped to earn income from continuing operations equal to 16% of sales. Income from continuing operations was xx of sales xxx which was slightly xxx than the target earnings of 16% of sales.

2) Problem P12-73B, page 728 of your text. Item 1 only

a) (50 points) Skeleton Cash Flow Statement:

The Ritz Furniture Gallery, Inc.
Statement of Cash Flows
Year Ended December 31, 2014
Cash flows from operating activities:
Receipts:
Total cash receipts
Total cash payments
Net cash provided by operating activities		65,200
Cash flows from investing activities:
Cash flows from financing activities:
Net decrease in cash
Cash balance, December 31, 2013		98,000
Cash balance, December 31, 2014		$ 61,300

Noncash investing and financing activities:
Total noncash investing and financing activities	$130,300

3) Problem P13-50A, page 801 of your text, Item 1 only

a) (50 points) Common Size Financial Statement Skeletons

Req. 1

CC Oliver Products, Inc.
Common-Size Income Statement Compared to Industry Average
Year Ended December 31, 2014
	CC Oliver Products	INDUSTRY AVERAGE
Net sales	100.0%	100.0%
Cost of goods sold		57.3
Gross profit		42.7
Operating expenses		29.4
Operating income		13.3
Other expenses		2.5
Net income		10.8%

CC Oliver Products, Inc.
Common-Size Balance Sheet Compared to Industry Average
December 31, 2014
	CC Oliver Products	INDUSTRY AVERAGE
Current assets		72.1%
Fixed assets, net		19.0
Intangible assets, net		4.8
Other assets		4.1
Total assets	100.0%	100.0%
Current liabilities		47.2%
Long-term liabilities		21.0
Stockholders’ equity		31.8
Total liabilities and stockholders’ equity	100.0%	100.0%

S13-1

Perform horizontal analysis of revenues and net income.

Celebrate! Corporation reported the following amounts on its 2014 comparative income statements:

(in thousands) 2014 2013 2012

Revenues………………………………$20,289 $20,045 $18,449

Total expenses………………………..10,915 10,338 10100

Perform a horizontal analysis and net income –both in dollar amounts and in percentages—for 2014 and 2013.

S13-2

Perform trend analysis of sales and net income.

Abbey, Inc., reported the following sales and net income amounts:

(in thousands) 2014 2013 2012 2011

Sales…………………………………….$ 9,960 $9,260 $8,790 $8,410

Net Income………………………….…….670 500 480 432

Show Abbey’s trend percentages for sales and net income. Use 2011 as the base year

S13-3

Perform vertical analysis to correct a cash shortage.

Software reported the following amounts on its balance sheets at December 31, 2014, 2013, and 2012:

2014 2013 2012

Cash ……………………………………………………$19,200 $13,600 $ 11,340

Receivables, net ……………………………….. 34,700 20,800 23,900

Inventory …………………………………………… 266,800 197,600 148,180

Prepaid expenses………………………………….34,900 41,600 33,460

Property, plant, and equipment, net…...220,400 244,400 258,120

Total assets……………………………………………$576,000 $518,000 $475,000

Sales and profits are high. Nevertheless, Robbles is experiencing a cash shortage. Perform a vertical analysis of Robbles Software’s assets at the end of years 2014, 2013, and 2012. Use the analysis to explain the reason for the cash shortage.

S13-4

Compare common-size income statements of two companies.

Kraft Inc, and Claire Corp are competitors. Compare the two companies by converting their condensed income statements to common size.

(In Millions) Kraft Claire

Net sales…………………………………………………$17,700 $7,869

Cost of goods sold…………………………………… 10,573 4,965

Selling and administrative expenses…………. 4,895 1,521

Interest expenses…………………………………………….53 23

Other expense………………………………………………….89 38

Income tax expense………………..……………………..730 250

Net Income…………………………………………………$2,360 $1,072

Which company earned more net income? Which company’s net income was a higher percentage of its net sales? Explain your answer.

S132-20A

Identify any weaknesses revealed by the statement of cash flows of Michigan Apple farms, Inc.

Michigan Apple Farms, Inc
Statement of cash Flow
For the current year
Operating activities:
Net Income		$72,000
Add (subtract) noncash items:
Depreciation	$11,250
Net increase in current assets other than cash	-53,500
Net decrease in current liabilities
exclusive of short-term dept	-19,750	-62,000
Net cash provided by operating activities		10,100
Investing activities:
Sale of property, plant, and equipment		124,200
Financing activities:
issuance of bonds payable	$117,050
Payment of short-term debt	-180,525
Payment of long-term debt	-89,025
Payment of dividends	-39,500
net cash used for financing activities		(192,00)
Increase (decrease) in cash		-57,700

E13-22A

Analyze the ability to pay liabilities.

LA Furniture company has requested that you determined whether the company’s ability to pay its current liabilities and long-term debts improved or deteriorated during 2014. To answer this question, compute the following ratios for 2014 and 2013:

a. Working capital

b. Current ratio

c. Quick (acid-test) ratio

d. Debt ratio

e. Times-interest-earned ratio

	2014	2015
cash	$51,000	$47,000
short term investments	28,000	27,000
net receivables	114,000	126,000
Inventory	236,000	265,000
Prepaid expenses	22,000	$8,000
total assets	518,000	535,000
total current liabilities	$224,000	262,000
long term debt	97,000	174,000
Income from operation	261,000	150,000
Intrest expense	41,000	42,000