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Acc/561 Wk 2 E13-5, E13-6, E13-9

•Exercise E13-5 •Exercise E13-6 •Exercise E13-9 The comparative balance sheets of Nike, Inc. are presented here. NIKE INC. Comparative Balance Sheets May 31 ($ in millions) Assets20072006 Current assets$8,076$7,346 Property, plant, and equipment (net)1,6781,658 Other assets934866 Total assets$10,688$9,870 Liabilities and Stockholders’ Equity Current liabilities$2,584$2,612 Long-term liabilities1,079973 Stockholders’ equity7,0256,285 Total liabilities and stockholders’ equity$10,688$9,870 Complete the horizontal analysis of the balance sheet data for Nike using 2006 as a base. If amount decreases, use either a negative sign preceding the number, e. g. -45 or parenthesis, e. g. (45). Round all percentages to 1 decimal place, e. g. 12. 5. ) NIKE, INC. Condensed Balance Sheet December 31 ($ in millions) Increase or (Decrease) 20072006AmountPercentage Assets Current assets$8,076$7,346$7309. 9% Property, plant and equipment (net)1,6781,658201. 2% Other assets934866687. 9% Total assets$10,688$9,870$8188. 3% Liabilities and stockholders’ equity Current liabilities$2,584$2,612$(28)(1. 1)% Long-term liabilities1,07997310610. 9% Total stockholders’ equity7,0256,28574011. % Total liabilities & stockholders’ equity$10,688$9,870$8188. 3% Complete the vertical analysis of the balance sheet data for Nike for 2007. (Round all of the percentages to 1 decimal place, e. g. 12. 5. ) NIKE, INC. Condensed Balance Sheet May 31, 2007 $ (in millions)Percent Assets Current assets$8,07675. 6% Property, plant and equipment (net)1,67815. 7% Other assets9348. 7% Total assets$10,688100. 0% Liabilities and stockholders’ equity Current liabilities$2,58424. 2% Long-term liabilities1,07910. 1% Stockholders’ equity7,02565. 7% Total liabilities and stockholder’s equity$10,688100. % Question 2 Here are the comparative income statements of Winfrey Corporation. WINFREY CORPORATION Comparative Income Statements For the Years Ended December 31 20102009 Net sales$598,000$520,000 Cost of goods sold477,000450,000 Gross profit$121,000$70,000 Operating expenses80,00045,000 Net income$41,000$25,000 Complete the horizontal analysis of the income statement data for Winfrey Corporation using 2009 as a base. (Round all percentages to 1 decimal place, e. g. 12. 5. ) WINFREY CORPORATION Condensed Income Statements For the Years Ended December 31 Increase or (Decrease)

During 2010 20102009AmountPercentage Net sales$598,000$520,000$78,00015. 0% Cost of goods sold477,000450,00027,0006. 0% Gross profit121,00070,00051,00072. 9% Operating expenses80,00045,00035,00077. 8% Net income$41,000$25,000$16,00064. 0% Complete the vertical analysis of the income statement data for Winfrey Corporation for both years. (Round all percentages to 1 decimal place, e. g. 12. 5. ) WINFREY CORPORATION Condensed Income Statements For the Years Ended December 31 20102009 $Percent$Percent Net sales$598,000100. 0%$520,000100. 0% Cost of goods sold477,00079. %450,00086. 5% Gross profit121,00020. 2%70,00013. 5% Operating expenses80,00013. 4%45,0008. 7% Net income$41,0006. 8%$25,0004. 8% Question 3 Armada Company has these comparative balance sheet data: ARMADA COMPANY Balance Sheets December 31 20102009 Cash$25,000$30,000 Receivables (net)65,00060,000 Inventories60,00050,000 Plant assets (net)200,000180,000 $350,000$320,000 Accounts payable$50,000$60,000 Mortgage payable (15%)100,000100,000 Common stock, $10 par140,000120,000 Retained earnings60,00040,000 $350,000$320,000 Additional information for 2010: 1. Net income was $25,000. . Sales on account were $375,000. Sales returns and allowances amounted to $25,000. 3. Cost of goods sold was $198,000. 4. Net cash provided by operating activities was $48,000. 5. Capital expenditures were $25,000, and cash dividends were $18,000. Compute the following ratios at December 31, 2010. (Round to 3 decimal places, e. g. 2. 515. ) Current 3. 000:1 Receivables turnover 5. 600 times Average collection period 65. 179 days Inventory turnover 3. 600 times Days in inventory 101. 389 days Cash debt coverage 0. 310 times Current cash debt coverage 0. 73 times Free cash flow$5,000 Solution Current ratio=$150,000=3. 000 :1 $50,000 Receivables turnover=$350,000=5. 600 times $62,500(1) (1) ($65,000 + $60,000) ? 2 Average collection period = 365 days ? 5. 600 = 65. 179 days Inventory turnover=$198,000=3. 600 times $55,000(2) (2) ($60,000 + $50,000) ? 2 Days in inventory = 365 days ? 3. 600 = 101. 389 days Cash debt coverage ratio=$48,000=0. 310 times ($160,000 + $150,000) ? 2 Current cash debt coverage ratio=$48,000=0. 873 times ($60,000 + $50,000) ? 2 Free cash flow = $48,000 – $25,000 – $18,000 = $5,000

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