MANAGERIAL ACCOUNTING HANDOUT PROBLEM 15 Score Name Section Problem (10 points).

Question

MANAGERIAL ACCOUNTING HANDOUT PROBLEM 15 Score Name Section Problem (10 points). The income statement and comparative balance sheets for Cruise Supply Store are attached. The following additional information is available CRUISE SUPPLY STORE ADDITIONAL INFORMATION FOR FINANCIAL STATEMENT ANALYSIS (a) The market price of the company's common stock on December 31, 20X4 is $49 b) Weighted average common shares outstanding for 20X4 were 10,000 (c) All sales were credit sales. REQUIRED: ( Prepare a vertical analysis on the income statement for the year ending (2) Prepare a horizontal analysis on the balance sheet from year 20X3 to 20X4 (3) Compute the following ratios for the company for 20X4. Round those ratios December 31, 20X4. Round all percentages to two decimal places (four decimal places in all) Round all percentages to two decimal places (four decimal places in all). that are percentages to two decimal places (four decimal places in all) and all other amounts to two decimal places. (a Current Ratio. (b) Inventory Turmover (c) Accounts Receivable Tumover (d) Times Interest Earned Ratio. (c) Return on Average Total Assets. (D Return on Average Common Stockholders' Equity. g) Earnings Per Share of Common Stock. h) Price/Earnings Ratio

Explanation / Answer

Cruise Supply Store For the Year Ended December 31st,20X4 Vertical Analysis of Income Statement 2014 Percent Working Sales(Net) $               4,62,000.00 100.00 % ($462000/$462000)*100 Cost of goods sold $               2,29,000.00 49.57 % ($229000/$462000)*100 Gross Profit $               2,33,000.00 50.43 % ($233000/$462000)*100 Operating Expenses $               1,36,000.00 29.44 % ($136000/$462000)*100 Income from operation $                   97,000.00 0.21 % ($97000/$462000)*100 Interest Expense $                   11,000.00 0.02 % ($11000/$462000)*100 Income Before Taxes $                   86,000.00 18.61 % ($86000/$462000)*100 Income Tax Expense $                   30,000.00 0.06 % ($30000/$462000)*100 Net Income $                   56,000.00 12.12 % ($56000/$462000)*100 Cruise Supply Store For the Year Ended December 31st,20X4 Horizontal Analysis (A) (B) (A)-(B)/(A) December 31,20X4 December 31,20X3 Assets Cash $                   96,000.00 $                 97,000.00 -1.0% Accounts Receivable $               1,12,000.00 $             1,16,000.00 -3.4% Inventories $               1,72,000.00 $             1,62,000.00 6.2% Prepaid Expenses $                   16,000.00 $                   7,000.00 128.6% Property,Plant & Equipment $               1,89,000.00 $             1,78,000.00 6.2% Total Assets $               5,85,000.00 $             5,60,000.00 4.5% Liabilities & Stockholder's Equity Accounts Payable $                   50,000.00 $                 60,000.00 -16.7% Income Taxes Payable $                   36,000.00 $                 25,000.00 44.0% Short term notes payable $               1,20,000.00 $             1,36,000.00 -11.8% Bonds Payable $               1,19,000.00 $             1,19,000.00 0.0% Common Stock $               1,60,000.00 $             1,20,000.00 33.3% Additional Paid in Capital $                   50,000.00 $                 30,000.00 66.7% Retained Earnings $                   50,000.00 $                 70,000.00 -28.6% Total Liabilities & Stockholder's Equity $               5,85,000.00 $             5,60,000.00 4.5% Ratios Current Ratio Current Assets/Current Liabilities Current Assets Cash $                   96,000.00 Accounts Receivable $               1,12,000.00 Inventories $               1,72,000.00 Prepaid Expenses $                   16,000.00 a) Total Current Assets $               3,96,000.00 Current Liabiltiies Accounts Payable $                   50,000.00 Income Tax Payable $                   36,000.00 Short Term Note Payable $               1,20,000.00 Total Current Liabilities $               2,06,000.00 Current Ratio=($396000/$206000) 1.92 :1 b) Inventory Turnover Cost of goods sold/Average Inventory Cost of goods sold $               2,29,000.00 Average Inventory=(Opening stock+closing Stock)/2=($162000+$172000)/2 $               1,67,000.00 Inventory Turnover=($229000/$167000)                                  1.37 Times c ) Accounts Receivable Turnover Credit Sales/Average Accounts Receivable Credit Sales $               4,62,000.00 Average Accounts Receivable=(Opening Accounts Receivable+Closing Accounts Receivable)/2=($116000+$112000)/2 $               1,14,000.00 Accounts Receivable Turnover=($462000/$114000) 4.05 Times d) Times Interest Earned Ratio=Earnings before interest & Tax/Interest Earnings before interest and tax $                   97,000.00 Interest $                   11,000.00 Times Interest Earned Ratio=($97000/$11000) 8.82 Times e) Return on Average Total Assets Net Profit after tax/Average Total Assets Net Profit after tax $                   56,000.00 Average Total Assets=(Opening Total Assets+Closing Total Assets)/2=($585000+$560000)/2 $               5,72,500.00 Return on Average Total Assets=($56000/$572500) 9.78% f) Return on Average stockholder's Equity=Net Profit after tax/Average stockholder's equity Net Profit after tax $                   56,000.00 Average Stock holder's Equity=(Beginning Stockholder's Equity+Ending Stockholder's Equity)/2=($220000+$260000)/2 $               2,40,000.00 Return on Average stockholder's equity=($56000/$240000) 23.33% Stockholder's Equity=Common Stock+Paid in Capital excess of par+Retained Earnings g) Earnings per share of common stock=Net Profit after tax/Number of shares outstanding=($56000/10000) $                              5.60 Per share h) Price/Earnings Ratio=Market Price per share/EPS=($49/$5.6) $                              8.75

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.