E15-1 Financial information for Blevins Inc. is presented below.
December 31, 2009December 31, 2008
Current assets $125,000 $100,000
Plant assets (net) 396,000 330,000
Current liabilities 91,000 70,000
Long-term liabilities 133,000 95,000
Common stock, $1 par 161,000 115,000
Retained earnings 136,000 150,000
Instructions
Prepare a schedule showing a horizontal analysis for 2009 using 2008 as the base year.
BLEVINS INC.
Condensed Balance Sheets
December 31
Increase or (Decrease)2009 / 2008 / Amount / Percentage
Assets
Current assets
Plant assets (net)
Total assets / $125,000
396,000
$521,000 / $100,000
330,000
$430,000 / ($25,000
(66,000
91,000 / (25.0%)
(20.0%)
(21.2%)
Liabilities
Current liabilities
Long-term liabilities
Total liabilities / $91,000
133,000
224,000 / $70,000
95,000
165,000 / ($21,000)
(38,000)
(59,000) / (30.0%)
(40.0%)
(35.8%)
Stockholders’ Equity
Common stock, $1 par
Retained earnings
Total stockholders’
equity
Total liabilities and
stockholders’
equity / 161,000
136,000
297,000
$521,000 / 115,000
150,000
265,000
$430,000 / ( 46,000 (15,000 )
(14,000)
(32,000)
($91,000) / (40.0%)
(9.3%)
(12.1%)
21.2%
E15-2 Operating data for Gallup Corporation are presented below.
2009 2008
Sales $750,000 $600,000
Cost of goods sold 465,000 390,000
Selling expenses 120,000 72,000
Administrative expenses 60,000 54,000
Income tax expense 33,000 24,000
Net income 72,000 60,000
Instructions
Prepare a schedule showing a vertical analysis for 2009 and 2008.
GALLUP CORPORATION
Condensed Income Statements
For the Years Ended December 31
2009 / 2008Amount / Percent / Amount / Percent
Sales
Cost of goods sold
Gross profit
Selling expenses
Administrative expenses
Total operating expenses
Income before income taxes
Income tax expense
Net income / $750,000
465,000
285,000
120,000
60,000
180,000
105,000
33,000
$72,000 / 100.0%
62.0%
38.0%
16.0%
8.0%
24.0%
14.0%
4.4%
9.6% / $600,000
390,000
210,000
72,000
54,000
126,000
84,000
24,000
$60,000 / 100.0%
65.0%
35.0%
12.0%
9.0%
21.0%
14.0%
4.0%
10.0%
E15-11 Scully Corporation’s comparative balance sheets are presented below.
SCULLY CORPORATION
Balance Sheets
December 31
2008 2007
Cash $ 4,300 $ 3,700
Accounts receivable 21,200 23,400
Inventory 10,000 7,000
Land 20,000 26,000
Building 70,000 70,000
Accumulated depreciation (15,000) (10,000)
Total $110,500 $120,100
Accounts payable $ 12,370 $ 31,100
Common stock 75,000 69,000
Retained earnings 23,130 20,000
Total $110,500 $120,100
Scully’s 2008 income statement included net sales of $100,000, cost of goods sold of $60,000, and net income of $15,000.
Instructions
Compute the following ratios for 2008.
(a) Current ratio.
(b) Acid-test ratio.
(c) Receivables turnover.
(d) Inventory turnover.
(e) Profit margin.
(f) Asset turnover.
(g) Return on assets.
(h) Return on common stockholders’ equity.
(i) Debt to total assets ratio.
(a)($4,300 + $21,200+ $10,000)/$12,370 = 2.87:1
(b)($4,300 + $21,200)/$12,370 = 2.06:1
(c)$100,000/[($21,200 + $23,400)/2] = 4.48
(d)$60,000/[($10,000 + $7,000)/2] = 7.06
(e)$15,000/$100,000 = 15%
(f)$100,000/[($110,500 + $120,100)/2] = .87
(g)$15,000/[($110,500 + $120,100)/2] = 13%
(h)$15,000/[($98,130 + $89,000)/2] = 16%
(i)$12,370/$110,500 = 11.2%