•
180
outof180points (100%)
Simon Company's year-end balance sheets follow.
At December 31
Assets
Cash
Accounts receivable, net
Merchandise inventory
Prepaid expenses
20 14
20 13
20 12
Plant assets, net
$ 31,600 $ 35,500 $ 37,400
88,500
61,000
51,000
11 2,000
83,600
52,500
10,400
9,450
5,000
234,000
278,000
257,000
Total assets
$ 520,500 $446,550 $ 379,900
Liabilities and Equity
Accounts payable
Long-term notes payable secured by
mortgages on plant assets
$ 129,200 $ 73,000 $ 50,000
96,000
100,000
Common stock, $10 par value
162,000
162,000
Retained earnings
133,300
111,550
82,200
162,000
85,700
$ 379,900
$ 520,500 $446,550
Total liabilities and equity
The company's income statements forthe y ears ended December 31, 20 14 and 20 13, follow.
For Year Ended December 31
2013
20 14
$630,000
$675,000
Sales
Cost of goods sold
$390,600
$398,250
Other operating expenses
144,900
202,500
Interest expense
12,300
13,000
Income taxes
9,550
8,925
Total costs and expenses
622,600
557,425
Net income
$ 52.400
$ 72,575
Earnings per share
$
$
Evaluate the company's efficiency and
profitabil i ~/
3.23
4.48
by computing the following for 20 14 and 20 13.
1.
award:
10 out of
10.00
·· ·· ·· ·· ·· ·· ··l>oinu;- ·
(1)Profit margin ratio.
Profit Margin Ratio
Choose Numerator:
Net income
Profit Margin Ratio
Choose Denominator:
./
Net sales
./
1201 4
$
52,400./
.$
675,000./
201 3
$
72,575./
$
630,000./
± "'"' "'" ""'
7.8%
11.5%
g.vard:
2.
10 out of
10.00
·· · · · · · ·points · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ..
(2)Total asset turnover.
----
Tota I Asset Turnover
Choose Numerator:
Net sales
c:noose Denominator:
-
./
Average total assets
Total Asset Turnover
./
=
I
~
2014
$
675,000./
I
$
483,525./
2013
$
630,000./
I
$
413,225./
=
Total asset turnover
1.4
times
1.5
times
3.
S"Nflrd:
10 out of
10.00
(3)Return on total assets.
--
Return On Total Assets
Choose Numerator:
....... Net income
..--"'I
Choose Denominator:
Average total assets
Return On Total Assets
./
=
Return on total assets
--1--
2014
52,400./
$
483,525./
=
10.8%
2013
72,575./
$
413,225./
=
17.6%
{The foUovdng inforn1ation applies to the questions displayed belov1.]
Simon Company's year-end balance sheets follow.
2014
At December 31
Assets
Cash
Accounts receivable, net
Merchandise inventory
Prepaid expenses
2013
2012
$ 30,521 $ 35,330 $ 36,791
Plant assets, net
88,458
107,980
9,542
61,221
80,098
9,00 1
265,733
247,3 10
48,578
51,746
3,969
219,716
$ 502,234 $432,960 $ 360,800
Total assets
Liabilrties and Equity
Accounts payable
Long-term notes payable secured by
mortgages on plant assets
$ 126,307 $ 73,1 70 $ 47,1 49
93,476
102,568
Common stock, $10 par value
162,500
Retained earnings
11 9,95 1
162,500
94,722
78,939
162,500
72,2 12
$ 502,234 $432,960 $ 360,800
Total liabilities and equity
The company's income statements for the years ended December 31, 20 14 and 20 13, follow.
For Year Ended December 31
2014
2013
$652,904
$515,222
Sales
Cost of goods sold
$398,27 1
$334,894
Other operating expenses
202,400
130,351
Interest expense
11 ,099
11 ,850
Income taxes
8,488
7,728
Total costs and expenses
620,258
484,823
Net income
$ 32,646
$ 30,399
Earnings per share
$
$
2.0 1
1.87
Calculate the company's long-term risk and capital structure positions at the end of 20 14 and 20 13 by
computing tl1e following ratios.
4.
SW91'd:
10 out of
10.00
(1) Debt and equity ratios.
Debt Ratio
I
Choose Numerator:
Total liabilities
v'j I
=
Debt Ratio
v' =
Debt ratio
Choose Denominator:
JTotal assets
201 4:
$
219,783v'
I
$
502,234v'
=
43.8%
1201 3:
T$
175,738v'
I
1$
432.960v'
=
40.6%
Egui!}! Ratio
~
I
Choose Numerator:
Total equi~/
2014:
$
v'j I
282,451v' I
1201 3:
$
257,222v'
I
=
Equity Ratio
v' =
Equity ratio
Choose Denominator:
JTotal assets
$
502,234v'
=
$
432,960v'
=
56.2%
- -
59.4%
5.
SW91'd:
10 out of
10.00
·····························points····
(2)Debt-to-eQuity ratio.
Debt-T0-Eaui1V Ratio
---~~
Choose Numerator:
1-----11Total liabilities
-10
I
201 4:
$
219.783_.I
2013:
$
175,738_.I
Total
I
Debt-To.Equity Ratio
Choose Denominator:
~~~·
eQui~/
v'.l
$
282,45 1_.I
=
=
$
257,222_.I
=
l
Debt-to-eQui ~/ ratio
0.78
to 1
0.68
to 1
6.
award:
10 out of
10.00
(3) Times interest earned.
Tines Interest Earned
Choose Numerator:
Income before interest and inc tax
Choose Denominator:
Interest expense
Tmes Interest Earned
Times interest earned
1201 4:
$
$
11 ,099./
=
4.7
times
12013:
$
$
11 ,850./
=
4.2
times
=
./+--~1--
award:
10 out of
7
•
·.................. 10.00
pomts ................................................................................................
Simon Company's year-end balance sheets follow.
At December 31
Assets
Cash
Accounts receivable, net
Merchandise inventory
Prepaid expenses
2014
20 13
2012
Plant assets, net
$ 31,067 $ 35,225 $ 38,596
88,242
62,916
50,952
11 0,947
84,8 18
55,360
4,33 1
10,205
9,342
236,76 1
286,1 05
26 1,635
Total assets
$ 386,000
$526,566 $453,936
Liabilrties and Equity
Accounts payable
Long-term notes payable secured by
mortgages on plant assets
$ 131,11 5 $ 78,249 $ 50,952
100,974
104,405
Common stock, $10 par value
162,500
162,500
Retained earnings
131,977
108,782
87,012
162,500
85,536
$ 386,000
$526,566 $453,936
Total liabilities and equi~/
(1)Compute the current ratio forthe year ended 20 14, 20 13, and 20 12.
Current Ratio
I
Choose Numerator:
ICurrent assets
.I~
=
Choose Denominator:
Current liabilities
.I~
2014:
$
240,461./
I
$
131, 11 5./
2013:
$
192,30 1./
I
$
78,249./
201 2.
$
149,239./
I
$
50,952./
=
=
=
Current Ratio
Current ratio
-
1.83
to 1
2.46
to 1
2.93
to 1
(2)Cornpute the acid-test ratio for the year ended 20 14, 20 13, and 20 12.
Acid-Test Ratio
I
ClKlose Numerator:
~~....-~..-~~~
Gash
2014:
$
2013:
$
2012:._J$
./
+
31,067.,I
+
Short-term investment~
./ +
Current receivables
•$
./
I
ClKlose Denominator:
Current liabilities
Acid-Test Ratio
./
=
=
=
=
+---1-35,225 .,I +
$
0
+
$
88,242.,I
$
131,115.,I
0
+
$
62,916.,I
$
78,249.,I
38,596.,I~
0
+
$
50,952.,I
$
50,952.,I
$
Acid-test ratio
0.9 1
to 1
1.25
to 1
1.76
to 1
I
8•
sward:
10 out of
10.00
.......................... points····
Simon Company's year-end balance sheets follow.
20 14
At December 31
Assets
Cash
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
$ 25,35 1 $ 29,930 $ 30,560
74,2 11
41, 158
51,859
67,842
43,833
94,230
8,327
7,70 1
3,36 1
227,566
213,086
192,888
Total assets
$429,685 $370,4 18 $3 11,800
Liabilities and Equity
Accounts payable
Long-term notes payable secured by
mortgages on plant assets
Common stock, $10 par value
Retained earnings
Total liabilities and equity
20 13
20 12
$103,782 $ 63,853 $ 41,569
79,973
163,500
82,430
86,048
163,500
57,017
68,908
163,500
37,823
$429,685 $370,4 18 $3 11,800
Express the balance sheets in common-size percents. (Do not round intermediate calculations and
round your final answers to 1 decimal place.)
SIMON COMPANY
Conmon-Size Comparative Balance Sheets
December 31, 2012-2014
2014
Cash
Accounts receivable, net
2013
2012
59%.I
8.1%v/
98%v/
17.3%.I
14.0%.I
13.2%.I
Merchandise inventor/
Prepaid expenses
21.9%.I
18.3%v/
14. 1%.I
1.9%v/
2.1%v/
1.1%v/
Plant assets, net
53 0%.I
57 5%.I
61 9%.,J
100.0%.I
100.0%.I
100.0%.I
24.2%.I
17.2%.I
13.3%v/
18.6%.I
23.2%.I
22 1%.I
Common stock, $10 par
38.1%.I
44.1%.I
52.4%.I
BRetained earnings
Total liabilities and equ1~1
19.2%.I
15.4%v/
12.1%.I
100.0%.I
100.0%.I
100.0%.I
Total assets
Accounts payable
Long-term notes payable secured by
Imortgages on plant assets
Simon Company's year-end balance sheets follow .
At December 31
Assets
Cash
Accounts receivable, net
Merchandise inventor/
Prepaid expenses
20 14
20 13
20 12
Plant assets, net
$ 25,226 $ 29,487 $ 30,107
73, 11 2
51,602
40, 143
91,924
68,1 88
43, 184
3,345
8,1 24
7,740
184,321
224,936
207,9 16
Total assets
$423,322 $364,933
Liabilities and Equity
Accounts payable
Long-term notes payable secured by
mortgages on plant assets
$ 30 1,100
$106,46 1 $ 62,290 $ 40, 143
Common stock, $10 par value
Retained earnings
80,380
84,774
162,500
162,500
73,98 1
55,369
67,209
162,500
31,248
$423,322 $364,933 $ 30 1,1 00
Total liabilities and equ i~/
The company's income statements for the years ended December 31, 20 14 and 20 13, follow. Assume
that all sales are on credit:
20 14
20 13
For Year Ended December 31
$434,270
$550,319
Sales
$282,276
$335,695
Cost of goods sold
Other operating expenses
Interest expense
Income taxes
109,870
9,988
6,514
170,599
9,355
7,1 54
522,803
408,648
Net income
$ 27,516
$ 25,622
Earnings per share
$
$
Total costs and expenses
1.69
1.58
9.
sward:
10 out of
10.00
· .......... " points .............................................................................. · .....................................................................................................
(1} Compute days' sales uncollected. (Use 365 days a year.)
Dais' Sales Uncollected
Choose Numerator:
[ Accounts receivable
.. I
./
I
..Choose Denominator:
JNetsales
x
./ - x
201 4:
$
73, 11 2./
I
$
550,319./
2013:
$
51,602./
I
$
434,270./
-
Days
=
365./
=
x
365./
=
x
365./
=
Days' Sales Uncollected
- -
Days' Sales Uncollected
48.5
days
43.4
days
sward:
10 out of
10
. 10.00
...................points ......................................................................................................................
(2) Compute accounts receivable turnover.
_____
,...
Accounts Receivable Turnover
Choose Nwnerator:
Net sales
....-- Choose Denominator:
Accounts Receivable Turnover
Average accounts receivable, net ./
2014:
$
550,3 19./
$
62,357./
201 3:
$
434,270./
$
45,873./
~ccounts receivable turnover
=
=
-1-
8.8
times
9.5
times
11 .
award:
10 out of
10.00
...........................polnrs ..................................................................................................................................
(3) Compute inventory turnover.
Inventor.! Turnover
~
Choose Numerator:
Cost of goods sold
./ -
I
uchoose Denominator:
I
1Ave rage
inventory
Inventory Turnover
~
./ =
-
f2014:
$
335,695./
I
!$
80,056./
=
,2013:
$
282,276./
I
'$
55,686./
=
Inventory turnover
--
4.2
times
5. 1
times
-
12 .
sward:
10 out of
10.00
··················po!nnr ······················································································································
(4) Compute days' sales in inventor/ . (Use 365 days a year.)
Days' Sales In Inventory
Choose Numerator:
Ending inventory
x
Choose Denominator:
./
Cost of goods so Id
Days
Days' Sales In Inventory
./ x
365./
=
x
x
365./
=
99.9
days
365./
=
88.2
days
201 4:
$
91,924./
$
335,695./
2013:
$
68,1 88./
$
282,276./
Days' sales in inventory
13.
award:
10 out of
10.00
· ·· ·· ·· ·· ····poifits ....
The following information for Tide Corporation:
($thousands)
Net sales
Cost of goods sold
20 13
$80 1,810
392,887
20 12
$453,000
134,088
Determine the 2012 and 2013 common-size percents for cost of goods sold using net sales as the
base.
Coomon-Size Percent for Cost of Goods Sold usina Net Sales as the base:
I'----,
Choose Numerator:
I
Analysis Period Cost of Goods Sold
Choose Denominator:
Analysis Period Net Sales
./ =
Common-Size Percents
--1
2013:
$
392,887./
$
80 1,8 10./ =
49.0%
2012:
$
134,088./
$
453,000./ =
29.6%
.,,...
IQuestion # 14 (of 18)
·I
next ~
porn ts
Sales
Cost of goods sold
Accounts receivable
2015
20 14
2013
201 2
2011
$ 533,786 $ 348,880 $ 277,992 $ 193,050 $ 143,000
72,930
179,679
274,681
145,076
100,1 56
25,942
20,375
19,015
11,293
9,767
Compute trend percents for the above accounts, using 20 11 as the base year.
Trend Percent for Net Sales:
Choose Numerator:
Choose Denominator:
Analysis period net sales
Base year net sales
2015:
$
$
143,000./
2014:
$
348,880./
$
143,000./
2013:
$
277,992./
I
$
143,000./
2012:
$
193,050./
I
.$
143,000./
./ =
Sales
4=
373%
244%
194%
135%
Trend Percent for Cost of Goods Sold:
Choose Numerator:
Analysis period cost of goods sold
I
Choose Denominator:
./
I
Base year cost of goods sold
I
$
72,930./
$
72,930./
./ =
2015:
$
274.68 1./
2014:
$
179,679./
2013:
$
145,076./
I
$
72,930./
2012:
$
100,1 56./
I
.$
72,930./
Cost of goods sold
4=
377%
246%
199%
137%
Trend Percenlfor Accounts Receivables:
Choose Numerator:
Choose Denominator:
Analysis period accounts receivable
Base year accounts receivable
./ =
2015:
$
25,942./
$
9,767./
2014:
$
20,375./
$
9,767./
2013:
$
19,015./
I
$
9,767./
2012:
$
11,293./
I
.$
9,767./
Accounts receivable
4=
266%
209%
195%
11 6%
15.
sward:
10 out of
10.00
·························poii'its··
Common-size and trend percents for R us~/nail Company's sales, cost of goods sold, and expenses
follow.
Sales
Cost of goods sold
Total expenses
Common-Size Percents
20 14
20 13
2012
100.0% 100.0% 100.0%
63.4
61.2
56.7
14.3
13.8
14.1
Trend Percents
2014
20 13
20 12
104.4% 103.2% 100.0%
11 6.7
111.4
100.0
105.9
101.0
100.0
Determine the net income for the following years. (Enter all amounts as positive values.)
2014
201J
2012
$
104,400.,/ $
103,200.,/
Cost of Goods Sold
66,1 69.,/
63,164.,/
56,700
Total Expenses
14,932.,/
14,24 1.,/
14,1001
Sales
Netlncome
$
1$
I
23,299
$
25,795
1$
Did the net income increase, decrease, or remain unchanged in this three-year period?
0 Remained unchanged
0 Net income increased
® Net income decreased
100,000
29,200
I
16 .
sward:
10 out of
10.00
..................· poiilts ...................................................................................
Which of the following items are part of financial reporting but are
purpose financial statements? (Select all that apply .)
~ Stock price information and analysis
0 Statement of cash flovts
~ tv1anagement discussion and analysis of financial performance
0 Income statement
~ C-Ompany nev1s releases
0 Balance sh-eet
D Financial statement notes
0 Statement of sh.areholders' equity
~ Prospectus
not included
as part of general-
17.
award:
10 out of
10.00
· ············poii'its ···············································································································································
The following information is for Tide Corporation:
($ thousands)
Net sales
Cost of goods sold
2013
$80 1,810
392,887
2012
$453,000
134,088
Determine the 20 12 and 20 13 trend percents for net sales using 20 12 as the base year.
I'----,
Choose Numerator:
Trend Percentfor Net Sales:
I
Choose Denominator:
Analysis Period Net Sales
.I
2013:
$
80 1,810./
201 2:
$
453,000./
"'"'--.I
=
453,000./. ,=_
453,000./ =
Base year Net Sales
$
---$
Trend Percent
177.0%
100.0%
18 .
award:
10 out of
10.00
.............poir'its .............................................................................
Compute t11e annual dollar changes and percent c11anges for eac11 of the following accounts.
(Decreases should have a minus sign in front of them. Round Percent Change to one decimal
place.)
Short-term investments
Accounts receivable
Notes payable
--
20 13
$374,634
97,364
0
2012
$234,000
101,000
88,000
Percent Change =
Percent Challlll!
.Short-term investments
fAccounts receivable
'Notes
- payable
1
$
-!-
60. 1%./
(36)%v'
(1 00.0)%./