ACC 221 Chapter Notes -Vanderbilt Avenue Line, Income Statement, Financial Statement
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Hana Corporation reported the following on its comparativeincome statement:
(in millions) | 2014 | 2013 | 2012 |
Revenue................................... | $13,413 | $13,150 | $12,500 |
Cost of sales............................ | $3,060 | $3,000 | $2,500 |
Perform a horizontal analysis of revenues and gross profit longdash—both in dollar amounts and in percentages long dash—for 2014and 2013. (Round your answers to two decimal places. Use a minussign or parentheses to represent a decrease in amount orpercentage.)
Variline Corporation | |||||||||
Comparative Income Statement | |||||||||
For The Years Ended December 31, 2014 and 2013 | |||||||||
Increase/(Decrease) | |||||||||
(amounts in millions) | 2014 | 2013 | |||||||
2014 | 2013 | 2012 | Change | Percentage | Change | Percentage | |||
Revenue | $13,413 | $13,150 | $12,500 | % | % | ||||
Cost of Sales | 3,060 | 3,000 | 2,500 | ||||||
Gross Profit | % | % |
Income Computation for a Manufacturing Firm The following datarelate to GenMet, a U.S. based consumer goods manufacturing firm,for the fiscal year ending October 31, 2013. Reported amounts arein millions of U.S. dollars ($). GenMet incurred manufacturingcosts (direct material, direct labor, manufacturing overhead)during fiscal 2013 totaling $2,752.0. Sales revenue was $6,700.2,selling and administrative expenses were $2,903.7, and interestexpense was $151.9. The income tax rate is 35%. Compute GenMet'snet income for fiscal year 2013. Round your calculations and answerto one decimal place. Enter the amount in millions.
October 31, 2013 | October 31, 2012 | |
Raw Materials Inventory | $101.5 | $73.7 |
Work-in-process Inventory | $119.1 | $100.8 |
Finished Goods Inventory | $322.3 | $286.2 |
BradburnCorporation was formed 5 years ago through a public subscription ofcommon stock. Daniel Brown, | |||||||
who owns | 15% | owns 15% of the common stock, was one of theorganizers of Bradburn and is its | |||||
current president. The companyhas been successful, but it currently is experiencing a shortage offunds. On | |||||||
June 10, Daniel Brownapproached the Topeka National Bank, asking for a 24-monthextension on two | $35,000 | ||||||
notes, which are due on June30, 2013, and September 30, 2013. Another note of | $6,000 | is due | |||||
on March 31, 2014, but heexpects no difficulty in paying this note on its due date. Brownexplained that | |||||||
Bradburn’s cash flow problemsare due primarily to the company’s desire to finance a | $300,000 | plant | |||||
expansion over the next 2fiscal years through internally generated funds. | |||||||
The commercialloan officer of Topeka National Bank requested financial reportsfor the last 2 fiscal years. | |||||||
BRADBURN CORPORATION | |||||||
Statement of FinancialPosition | |||||||
March 31 | |||||||
Assets | 2013 | 2012 | |||||
Cash | $18,200 | $12,500 | |||||
Notes receivable | 148,000 | 132,000 | |||||
Accounts receivable (net) | 131,800 | 125,500 | |||||
Inventories (at cost) | 105,000 | 50,000 | |||||
Plant & equipment (net ofdepreciation) | 1,449,000 | 1,420,500 | |||||
Total assets | $1,852,000 | $1,740,500 | |||||
Liabilities and Owners'Equity | |||||||
Accounts payable | $79,000 | $91,000 | |||||
Notes payable | 76,000 | 61,500 | |||||
Accrued liabilities | 9,000 | 6,000 | |||||
Common stock (130,000 shares,$10 par) | 1,300,000 | 1,300,000 | |||||
Retainedearningsa | 388,000 | 282,000 | |||||
Total liabilities and owners'equity | $1,852,000 | $1,740,500 | |||||
aCash dividends were paid at the rate of $1.00 per sharein fiscal year 2012 and $2.00 per share in fiscal year 2013. | |||||||
SANDBURG CORPORATION | |||||||
Income Statement | |||||||
For The Fiscal Year EndedMarch 31 | |||||||
2013 | 2012 | ||||||
Sales | $3,000,000 | $2,700,000 | |||||
Cost of goods sold | 1,530,000 | 1,425,000 | |||||
Gross margin | 1,470,000 | 1,275,000 | |||||
Operating expenses | 860,000 | 780,000 | |||||
Income before incometaxes | 610,000 | 495,000 | |||||
Income taxes | 244,000 | 198,000 | |||||
Net income after incometaxes | $366,000 | $297,000 | |||||
Depreciation charges on theplant and equipment of | $100,000 | and | $102,500 | ||||
for the fiscal years endedMarch 31, 2012 and 2013, respectively, are included in cost ofgoods sold. | |||||||
Instructions: | |||||||
Fill in the provided matrixand utilize it as the matrix for "VLOOKUP" formulas within thecells below. | |||||||
Column 4 | Column 5 | ||||||
2013 | 2012 | ||||||
Average inventory - 2011 | Formula | ||||||
Average total assets | Formula | 1,714,500 | |||||
Total Assets = Mar 31, 2009 | 1,688,500 | ||||||
Total Assets = Mar 31, 2010 | 1,740,500 | ||||||
Total Assets = Mar 31, 2011 | Amount | ||||||
Cost of goods sold | Amount | 1,425,000 | |||||
Current assets | Amount | Amount | |||||
Current liabilities | Amount | Amount | |||||
Dividends | Amount | Amount | |||||
Depreciation | Amount | Amount | |||||
Gross margin | Amount | Amount | |||||
Income before taxes | Amount | Amount | |||||
Income taxes (40%) | 244,000 | Amount | |||||
Inventories = EOY 2010 | Amount | ||||||
Inventories = EOY 2011 | Amount | ||||||
Net income after taxes | Amount | Amount | |||||
Operating expenses | 860,000 | Amount | |||||
Sales | 3,000,000 | 2,700,000 | |||||
(a) Compute the followingitems for Bradburn Corporation: | |||||||
(1) Current ratio for fiscalyears 2012 and 2013. | |||||||
Note: The formulas in somecell formulas are "live" and need values placed in their sourcecells. | |||||||
2012 Current ratio = | Currentassets ----------------------- = Current liabilities | Amount | |||||
---------------- = | Formula | to 1 | |||||
Amount | |||||||
2013 Current ratio = | Currentassets ----------------------- = Current liabilities | Formula | |||||
---------------- = | Formula | to 1 | |||||
Formula | |||||||
(2) Acid-test (quick) ratiofor fiscal years 2012 and 2013. | |||||||
2012 Quick ratio = | Current assets -Inventories ----------------------- = Current liabilities | Formula | |||||
---------------- = | Formula | ||||||
Formula | to 1 | ||||||
2013 Quick ratio = | Current assets -Inventories ----------------------- = Current liabilities | Formula | |||||
---------------- = | Formula | ||||||
Formula | to 1 | ||||||
(3) Inventory turnover forfiscal year 2013. | |||||||
2013 Inventory Turnover = | Cost of goodssold ------------------------------------ = Average inventory | Amount | |||||
---------------- = | Formula | ||||||
#N/A | to 1 | ||||||
(4) Return on assets forfiscal years 2012 and 2013. (Assume total assets were | $1,688,500 | ||||||
at March 31, 2011.) | |||||||
2012 Return on assets = | Net income ----------------------- = Average total assets | Formula | |||||
---------------- = | Formula | ||||||
Formula | |||||||
2013 Return on assets = | Net income ----------------------- = Average total assets | Formula | |||||
---------------- = | Formula | ||||||
Formula | |||||||
(5)Percentage change in sales, cost of goods sold, gross margin, andnet income after taxes from fiscal year 2012 to 2013. Omit "000" from thevalues. | |||||||
2012 | 2013 | Change | Percent Change | ||||
Sales | $3,000 | $2,700 | $300 | 11.11% | |||
Cost of goods sold | #VALUE! | Formula | Formula | Formula | |||
Gross margin | #VALUE! | Formula | Formula | Formula | |||
Net income after taxes | #VALUE! | Formula | Formula | Formula | |||
Note: The formulas in somecell formulas are "live" and need values placed in their sourcecells. | |||||||
(b)Identify and explain what other financial reports and/or financialanalyses might be helpful to the commercial loan officer of Topeka NationalBank in evaluating Daniel Brown’s request for a timeextension on Bradburn’s notes. | |||||||
Otherfinancial reports and financial analyses which might be helpful tothe commercial loan officer of Spokane National Bank include: | |||||||
1 | Enter text answeras appropriate. | ||||||
2 | Enter text answeras appropriate. | ||||||
3 | Enter text answeras appropriate. | ||||||
4 | Enter text answeras appropriate. | ||||||
(c)Assume that the percentage changes experienced in fiscal year 2013as compared with fiscal year 2012 for sales and cost of goods sold will berepeated in each of the next 2 years. Is Bradburn’s desire to finance the plant expansion frominternally generated funds realistic? Discuss. | |||||||
Entertext answer as appropriate. | |||||||
2013 | 2014 | 2015 | |||||
Sales | $3,000.0 | $3,000.0 | $3,000.0 | ||||
Cost of goods sold | Formula | Formula | Formula | ||||
Gross margin | Formula | Formula | Formula | ||||
Operating expenses | Formula | Formula | Formula | ||||
Income before taxes | Formula | Formula | Formula | ||||
Income taxes (40%) | Formula | Formula | Formula | ||||
Net income | Formula | Formula | Formula | ||||
Add: Depreciation | Amount | Amount | |||||
Deduct: Dividends | Amount | Amount | |||||
Note repayment | Amount | ||||||
Funds available for plant expansion | Formula | Formula | |||||
Plant expansion | Amount | Amount | |||||
Excess funds | Formula | Formula | |||||
Assumptions: Complete as appropriate. | |||||||
Sales increase at a rate of | |||||||
Cost of goods sold increases at rate of | |||||||
despite depreciation remaining constant. | |||||||
Other operating expenses increase at the same rateexperienced from 2012 to 2013; | |||||||
i.e., at | |||||||
Depreciation remains constant at | |||||||
Dividends remain at | per share. | ||||||
Plant expansion is financed equally over the twoyears( | each year). | ||||||
Loan extension is granted. | |||||||
(d)Should Topeka National Bank grant the extension on Bradburn’s notesconsidering Daniel Brown’s statement about financing the plant expansionthrough internally generated funds? Discuss. | |||||||
Enter text answer as appropriate. |