2019
2018
2017
2016
2015
Sales
$
493,866
$
320,692
$
265,035
$
187,968
$
142,400
Cost of goods sold
249,483
162,096
135,868
95,934
71,200
Accounts receivable
23,953
18,760
18,128
10,959
9,726
1. Compute trend percents for the above accounts, using 2015 as the base year.
Trend Percent for Net Sales:
Choose Numerator:
Choose Denominator:
=
Trend percent
2019:
=
%
2018:
=
%
2017:
=
%
2016:
=
%
Trend Percent for Cost of Goods Sold:
Choose Numerator:
Choose Denominator:
=
Trend percent
2019:
=
%
2018:
=
%
2017:
=
%
2016:
=
%
Trend Percent for Accounts Receivables:
Choose Numerator:
Choose Denominator:
=
Trend percent
2019:
=
%
2018:
=
%
2017:
=
%
2016:
=
%
2. Express the following comparative income statements in common-size percents.
Using the common-size percentages, which item is most responsible for the decline in net income?
GOMEZ CORPORATION
Comparative Income Statements
For Years Ended December 31
Cu
ent Yea
Prior Yea
$
%
$
%
Sales
$740,000
$640,000
Cost of goods sold
570,800
284,400
Gross profit
169,200
355,600
Operating expenses
129,200
252,800
Net income
$40,000
$102,800
3. Common-size and trend percents for Rustynail Company's sales, cost of goods sold, and expenses follow.
Common-Size Percents
Trend Percents
Cu
ent Y
1 Yr Ago
2 Yrs Ago
Cu
ent Y
1 Yr Ago
2 Yrs Ago
Sales
100.0
%
100.0
%
100.0
%
103.7
%
102.5
%
100.0
%
Cost of goods sold
63.4
61.2
58.0
113.4
108.2
100.0
Total expenses
14.2
13.7
14.0
105.2
100.3
100.0
Determine the net income for the following years.
Did the net income increase, decrease, or remain unchanged in this three-year period?
Cu
ent Y
1 Yr Ago
2 Yrs Ago
Sales
$100,000
Cost of Goods Sold
58,000
Total Expenses
14,000
Net Income
$28,000
4. Simon Company's year-end balance sheets follow.
At December 31
Cu
ent Y
1 Yr Ago
2 Yrs Ago
Assets
Cash
$
28,604
$
32,124
$
33,804
Accounts receivable, net
78,838
57,364
45,982
Merchandise inventory
102,190
74,286
48,976
Prepaid expenses
8,850
8,519
3,870
Plant assets, net
256,818
237,448
212,268
Total assets
$
475,300
$
409,741
$
344,900
Liabilities and Equity
Accounts payable
$
120,717
$
69,246
$
45,072
Long-term notes payable secured by
mortgages on plant assets
92,037
92,356
76,985
Common stock, $10 par value
163,500
163,500
163,500
Retained earnings
99,046
84,639
59,343
Total liabilities and equity
$
475,300
$
409,741
$
344,900
1. Express the balance sheets in common-size percent. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.)
2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable?
3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favorable or unfavorable?
SIMON COMPANY
Common-Size Comparative Balance Sheets
December 31
Cu
ent Yea
1 Year Ago
2 Years Ago
Assets
Cash
%
%
%
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets
%
%
%
Liabilities and Equity
Accounts payable
%
%
%
Long-term notes payable secured by mortgages on plant assets
Common stock, $10 pa
Retained earnings
Total liabilities and equity
%
%
%
The following apply to 5-8
5. Simon Company’s year-end balance sheets follow.
At December 31
Cu
ent Y
1 Yr Ago
2 Yrs Ago
Assets
Cash
$
31,551
$
36,880
$
37,656
Accounts receivable, net
89,600
62,100
50,100
Merchandise inventory
115,000
82,000
52,000
Prepaid expenses
10,161
9,681
4,184
Plant assets, net
283,157
265,778
232,660
Total assets
$
529,469
$
456,439
$
376,600
Liabilities and Equity
Accounts payable
$
133,156
$
77,910
$
50,208
Long-term notes payable secured by
mortgages on plant assets
100,536
106,031
84,061
Common stock, $10 par value
162,500
162,500
162,500
Retained earnings
133,277
109,998
79,831
Total liabilities and equity
$
529,469
$
456,439
$
376,600
The company’s income statements for the Cu
ent Year and 1 Year Ago, follow. Assume that all sales are on credit:
For Year Ended December 31
Cu
ent Y
1 Yr Ago
Sales
$
688,310
$
543,162
Cost of goods sold
$
419,869
$
353,055
Other operating expenses
213,376
137,420
Interest expense
11,701
12,493
Income tax expense
8,948
8,147
Total costs and expenses
653,894
511,115
Net income
$
34,416
$
32,047
Earnings per share
$
2.12
$
1.97
(1-a) Compute days' sales uncollected.
(1-b) For each ratio, determine if it improved or worsened in the cu
ent year.
Days' Sales Uncollected
Choose Numerator:
Choose Denominator:
x
Days
=
Days' Sales Uncollected
x
=
Days' Sales Uncollected
Cu
ent Yr:
x
=
0
days
1 Yr Ago:
x
=
0
days
6. (2-a) Compute accounts receivable turnover.
(2-b) For each ratio, determine if it improved or worsened in the cu
ent year.
Accounts Receivable Turnove
Choose Numerator:
Choose Denominator:
=
Accounts Receivable Turnove
=
Accounts receivable turnove
Cu
ent Yr:
=
times
1 Yr Ago:
=
times
7. (3-a) Compute inventory turnover.
(3-b) For each ratio, determine if it improved or worsened in the cu
ent year.
Inventory Turnove
Choose Numerator:
Choose Denominator:
=
Inventory Turnove
=
Inventory turnove
Cu
ent Yr:
=
times
1 Yr Ago:
=
times
8. (4-a) Compute days' sales in inventory.
(4-b) For each ratio, determine if it improved or worsened in the cu
ent year.
Days Sales Turnove
Choose Numerator:
Choose Denominator:
=
Days Sales Turnove
=
Days Sales turnove
Cu
ent Yr:
=
times
1 Yr Ago:
=
times
The following apply to 9-11
Simon Company’s year-end balance sheets follow.
At December 31
Cu
ent Y
1 Yr Ago
2 Yrs Ago
Assets
Cash
$
32,178
$
37,233
$
39,180
Accounts receivable, net
95,146
64,493
52,752
Merchandise inventory
116,074
87,859
56,198
Prepaid expenses
10,781
10,173
4,311
Plant assets, net
296,719
275,154
235,559
Total assets
$
550,898
$
474,912
$
388,000
Liabilities and Equity
Accounts payable
$
141,289
$
80,260
$
50,704
Long-term notes payable secured by
mortgages on plant assets
101,497
112,507
84,033
Common stock, $10 par value
162,500
162,500
162,500
Retained earnings
145,612
119,645
90,763
Total liabilities and equity
$
550,898
$
474,912
$
388,000
The company’s income statements for the Cu
ent Year and 1 Year Ago, follow.
For Year Ended December 31
Cu
ent Y
1 Yr Ago
Sales
$
716,167
$
565,145
Cost of goods sold
$
436,862
$
367,344
Other operating expenses
222,012
142,982
Interest expense
12,175
12,998
Income tax expense
9,310
8,477
Total costs and expenses