Extreme Edge, Inc. Income Statements For the Years Ended December 31, 2017, 2016
ID: 2459781 • Letter: E
Question
Extreme Edge, Inc.
Income Statements
For the Years Ended December 31, 2017, 2016 and 2015
($ in thousands)
2017 2016 2015
Sales revenue
$1,340
$1,200
$1,000
Less: Cost of goods sold
685
660
600
Gross profit
655
540
400
Operating expenses:
Depreciation expense
200
120
100
Amortization expense
5
5
5
Other operating expenses
368 573
345 470
255 360
Income from operations
82
70
40
Interest (financing) expense
32
10
10
Pretax income
50
60
30
Income tax expense (40%)
20
24
12
Net income
$ 30
$ 36
$ 18
Earnings per share
$0.60
$0.72
$0.45
Extreme Edge, Inc.
Balance Sheets
December 31, 2017, 2016 and 2015
($ in thousands)
2017 2016 2015
Assets
Cash
$ 65
$ 90
$ 30
Accounts receivable, net
150
80
90
Inventory
298
228
170
Total current assets
513
398
290
Property, Plant and Equipment:
Equipment (at cost)
800
600
500
Less: accumulated depreciation
(420)
(220)
(100)
Equipment, net of accumulated depreciation
380
380
400
Intangible Assets:
Customer database (at cost)
25
25
25
Less: accumulated amortization
(15)
(10)
(5)
Customer database, net of accumulated amortization
10
15
20
Total Assets
$903
$793
$710
Liabilities
Accounts payable
$ 44
$145
$160
Accrued liabilities
6
20
32
Total current liabilities
50
165
192
Long-term Liabilities:
Notes payable
300
100
100
Total Liabilities
350
265
292
Shareholders' Equity
Common stock, $1 par
50
50
40
Additional paid-in-capital on common stock
430
430
360
Total contributed capital
480
480
400
Retained earnings
73
48
18
Total Shareholders' Equity
553
528
418
Total Liabilities and Shareholders' Equity
$903
$793
$710
Problem 6-2
Required: Refer to the Chapter 6 Homework Spreadsheets above. Compute the 2017 horizontal common-size income financial statements for Extreme Edge.
Extreme Edge, Inc.
Horizontal Common-Size Income Statements
For the Years Ended December 31, 2017, 2016 and 2015
2017 2016 2015
Sales revenue
120.0%
100.0%
Less: Cost of goods sold
110.0%
100.0%
Gross profit
135.0%
100.0%
Operating expenses:
Depreciation expense
120.0%
100.0%
Amortization expense
100.0%
100.0%
Other operating expenses
135.3%
100.0%
Income from operations
175.0%
100.0%
Interest (financing) expense
100.0%
100.0%
Pretax income
200.0%
100.0%
Income tax expense (40%)
200.0%
100.0%
Net income
200.0%
100.0%
Extreme Edge, Inc.
Horizontal Common-Size Balance Sheets
December 31, 2017, 2016 and 2015
2017 2016 2015
Assets
Cash
300.0%
100.0%
Accounts receivable, net
88.9%
100.0%
Inventory
134.1%
100.0%
Total current assets
137.2%
100.0%
Property, Plant and Equipment:
Equipment (at cost)
120.0%
100.0%
Less: accumulated depreciation
220.0%
100.0%
Equipment, net of accumulated depreciation
95.0%
100.0%
Intangible Assets:
Customer database (at cost)
100.0%
100.0%
Less: accumulated amortization
200.0%
100.0%
Customer database, net of accumulated amortization
75.0%
100.0%
Total Assets
111.7%
100.0%
Liabilities
Accounts payable
90.6%
100.0%
Accrued liabilities
62.5%
100.0%
Total current liabilities
85.9%
100.0%
Long-term Liabilities:
Notes payable
100.0%
100.0%
Total Liabilities
90.8%
100.0%
Shareholders' Equity
Common stock, $1 par
125.0%
100.0%
Additional paid-in-capital on common stock
119.4%
100.0%
Total contributed capital
120.0%
100.0%
Retained earnings
266.7%
100.0%
Total Shareholders' Equity
126.3%
100.0%
Total Liabilities and Shareholders' Equity
111.7%
100.0%
Sales revenue
$1,340
$1,200
$1,000
Less: Cost of goods sold
685
660
600
Gross profit
655
540
400
Operating expenses:
Depreciation expense
200
120
100
Amortization expense
5
5
5
Other operating expenses
368 573
345 470
255 360
Income from operations
82
70
40
Interest (financing) expense
32
10
10
Pretax income
50
60
30
Income tax expense (40%)
20
24
12
Net income
$ 30
$ 36
$ 18
Earnings per share
$0.60
$0.72
$0.45
Explanation / Answer
Income Statement Particulars 2017 Sales 134% Less : Cost of goods sold 114% Gross Profit 164% Operating Expenses : Depreciation Expense 200% Amortization expense 100% Other operating expense 144% Total 159% Income from Operations 205% Interest Expense 320% Pretax Income 167% Income Tax expense 167% Net Income 167% earning per share 133% Balance Sheet Asset 2017 Cash 217% Account receivable Net 167% Inventory 175% Total Current asset 177% property Plant & Equipment Equipment Cost 160% Less : Accumulated dep 420% Equipment Net of dep 95% Intangible asset: Customer database 100% Less : Accumulated Amort 300% Customer database net 50% Total Asset 127% Liabilities Accounts Payable 28% Accrued Liabilities 19% Total Current Liabilities 26% Long term Liabilities Notes Payable 300% Total Laibilities 120% Share Holder's Equity Common Stock 125% Additional Paid in Capital 119% Total Contributed Capital 120% Retained Earning 406% Total Shareholder's equity 132% total Liability & Shareholder's 127% equity
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