Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem P9.34APGA
Using ratio data to evaluate a company’s financial position
| Learning Objective 5 1. Acid-test ratio (2018) 0.88 |
The comparative financial statements of Norfolk Cosmetic Supply for 2018, 2017, and 2016 include the data shown here:
| 2018 2017 2016 | |
| Balance sheet partial Current Assets: Cash Short-term Investments Accounts Receivable, Net Merchandise Inventory Prepaid Expenses Total Current Assets Total Current Liabilities Income statement-partial Net Sales (all on account) |
$70,000 $ 60,000 $50,000 140,000 170,000 120,000 280,000 240,000 260,000 355,000 330,000 310,000 70,000 35,000 35,000 915,000 835,000 775,000 560,000 630,000 640,000 5,890,000 5,130,000 4,210,000 |
Requirements
1. Compute these ratios for 2018 and 2017.
a. Acid-test ratio (Round to two decimals.)
b. Accounts receivable turnover (Round to two decimals.)
c. Days’ sales in receivable (Round to the nearest whole day.)
2. Considering each ratio individually, which ratios improved from 2017 to 2018 and which ratios deteriorated? Is the trend favorable or unfavorable for the company?
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GIVE THE COMPARATIVE INCOME STATEMENT HORIZONTAL AND VERTICAL ANALYSIS FROM THE FOLLOWING INCOME STATEMENT BELOW
JOLLIBEE INCOME STATEMENT
ITEM
2016
2017
2018
2019
2020
Sales/Revenue
113.81B
133.61B
161.17B
179.63B
129.31B
Sales Growth
-
17.40%
20.62%
11.45%
-28.01%
Cost of Goods Sold (COGS) incl. D&A
-
-
132.96B
150.88B
115.39B
COGS Growth
-
-
-
13.47%
-23.52%
COGS excluding D&A
89.27B
105.39B
121.08B
137.38B
100.82B
Depreciation & Amortization Expense
4B
4.75B
11.89B
13.5B
14.57B
Depreciation
3.93B
4.66B
11.73B
13.34B
14.32B
Amortization of Intangibles
68.99M
78.95M
151.82M
145.42M
245.23M
Gross Income
20.54B
23.48B
28.21B
28.75B
13.92B
Gross Income Growth
-
14.30%
20.12%
1.93%
-51.57%
Gross Profit Margin
-
-
-
-
10.77%
SG&A Expense
-
-
17.64B
20.21B
20.42B
SGA Growth
-
-
-…
All-Hands Property & Casualty Insurance
Company has the following financial ratios.
2019 2018
Loss Ratio 67.8 68.1
Expense Ratio 24.2 25.1
Net Investment Yield 3.5 4.0
a. Calculate the Combined Ratio {Loss Ratio +
Expense Ratio} for each year. Combined Ratio
2019
Combined Ratio 2018
b. Calculate the Overall Profitability Ratios
Overall Profitability Ratio 2019
Overall Profitability
Ratio 2018
why the Overall Profitability Ratio Changed
in 2019 Based on the Loss Ratio, Expense
Ratio, and Net Investment Yield Trends?
Problem I. The following data represent selected information from the comparative income statement and balance sheet for Little CPA Company for the years ended December 31, 2020 and 2019:
2020
2019
Net Sales (all on credit)
P370,000
P333,000
Cost of goods sold
160,000
150,000
Gross profit
210,000
183,000
Income from operations
95,000
87,000
Interest expense
8,000
8,000
Net income
70,000
57,000
Cash
10,000
14,000
Accounts receivable, net
30,000
25,000
Inventory
43,000
40,000
Prepaid expenses
5,000
7,000
Total current assets
88,000
86,000
Total noncurrent assets
112,000
104,000
Total current liabilities
70,000
60,000
Total noncurrent liabilities
40,000
45,000
Ordinary share capital, no par*
60,000
60,000
Retained earnings
30,000
25,000
Note: 10,000 ordinary shares have been issued and outstanding since the company was established. They had a…
Chapter 9 Solutions
Horngren's Accounting (12th Edition)
Ch. 9 - 1. With good internal controls, the person who...Ch. 9 - Which of the following is a limitation of the...Ch. 9 - 3. The entry to record a write-off of an...Ch. 9 - Brickman Company uses the allowance method to...Ch. 9 - Brickman’s ending balance of accounts Receivable...Ch. 9 - During the year, Bernard Company had net credit...Ch. 9 - At December 31 year-end, Crain Company has an...Ch. 9 - Using the data in the preceding question, what...Ch. 9 - At year-end, Schultz Company has cash of $11,600,...Ch. 9 - Using the data in the preceding question, assume...
Ch. 9 - What is the difference between accounts receivable...Ch. 9 - List some common examples of other receivables,...Ch. 9 - Prob. 3RQCh. 9 - When dealing with receivables, give an example of...Ch. 9 - What type of account must the sum of all...Ch. 9 - Prob. 6RQCh. 9 - What occurs when a business factors its...Ch. 9 - What occurs when a business pledges its...Ch. 9 - What is the expense account associated with the...Ch. 9 - When is bad debts expense recorded when using the...Ch. 9 - What are some limitations of using the direct...Ch. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - When using the allowance method, what account is...Ch. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - How do the percent-of-receivables and...Ch. 9 - What is the difference between the...Ch. 9 - In accounting for bad debts, how do the income...Ch. 9 - What is the formula to compute interest on a note...Ch. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. S9.1SECh. 9 - Recording credit sales and collections Learning...Ch. 9 - Applying the direct write-off method to account...Ch. 9 - Collecting a receivable previously written...Ch. 9 - Applying the allowance method to account for...Ch. 9 - Applying the allowance method (percent-of-sales)...Ch. 9 - Applying the allowance method...Ch. 9 - Applying the allowance method...Ch. 9 - Computing interest amounts on notes receivable...Ch. 9 - Accounting for a note receivable Learning...Ch. 9 - Accruing interest revenue and recording collection...Ch. 9 - Recording a dishonored note receivable Learning...Ch. 9 - Prob. S9.13SECh. 9 - Defining common receivables terms Learning...Ch. 9 - E9-15 Identifying and correcting internal control...Ch. 9 - Recording credit sales and collections Learning...Ch. 9 - Journalizing transactions using the direct...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. E9.21ECh. 9 - Journalizing credit sales, note receivable...Ch. 9 - Journalizing note receivable transactions...Ch. 9 - Journalizing note receivable transactions Learning...Ch. 9 - Journalizing note receivable transactions Learning...Ch. 9 - Evaluating ratio data Learning Objective 5 Abanaki...Ch. 9 - Computing the collection period for receivables...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. P9.31APGACh. 9 - Accounting for notes receivable and accruing...Ch. 9 - Prob. P9.33APGACh. 9 - Using ratio data to evaluate a company’s financial...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. P9.37BPGBCh. 9 - Prob. P9.38BPGBCh. 9 - Prob. P9.39BPGBCh. 9 - Accounting for notes receivable, dishonored notes,...Ch. 9 - Using ratio data to evaluate a company’s financial...Ch. 9 - Prob. P9.42CTCh. 9 - Prob. P9.43CPCh. 9 - Prob. P9.44PSCh. 9 - Prob. 9.1TIATCCh. 9 - Decision Case 9-1 Weddings on Demand sells on...Ch. 9 - Decision Case 9-2 Pauline’s Pottery has always...Ch. 9 - Prob. 9.1FCCh. 9 - Financial Statement Case 9-1 Use Target...
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Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License