In: Accounting
Here are comparative statement data for Wildhorse Company and
Sandhill Company, two competitors. All balance sheet data are as of
December 31, 2022, and December 31, 2021.
Wildhorse Company |
Sandhill Company |
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2022 |
2021 |
2022 |
2021 |
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Net sales |
$1,892,000 | $580,000 | ||||||
Cost of goods sold |
1,075,000 | 298,000 | ||||||
Operating expenses |
260,000 | 87,000 | ||||||
Interest expense |
8,200 | 2,200 | ||||||
Income tax expense |
65,300 | 29,000 | ||||||
Current assets |
498,742 | $477,987 | 127,504 | $ 121,585 | ||||
Plant assets (net) |
806,004 | 765,000 | 213,784 | 192,492 | ||||
Current liabilities |
101,477 | 115,997 | 54,082 | 46,330 | ||||
Long-term liabilities |
174,405 | 137,700 | 45,319 | 38,250 | ||||
Common stock, $10 par |
765,000 | 765,000 | 183,600 | 183,600 | ||||
Retained earnings |
263,864 | 224,290 | 58,287 | 45,897 |
(a)
Prepare a vertical analysis of the 2022 income statement data for
Wildhorse Company and Sandhill Company. (Round all
ratios to 1 decimal place, e.g. 2.5%.)
Condensed Income Statement |
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Wildhorse Company |
Sandhill Company |
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Dollars |
Percent |
Dollars |
Percent |
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select an income statement item Total ExpensesTotal Operating ExpensesDividendsCost of Goods SoldSales RevenuesIncome From OperationsNet SalesIncome Tax ExpenseOther Revenues and GainsOther Expenses and LossesExpensesOperating ExpensesGross ProfitInterest ExpenseRetained Earnings, December 31Retained Earnings, January 1Income Before Income TaxesNet Income / (Loss)Total Revenues |
$1,892,000 |
enter percentages |
% |
$580,000 |
enter percentages |
% |
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select an income statement item Total ExpensesTotal Operating ExpensesExpensesTotal RevenuesGross ProfitCost of Goods SoldNet Income / (Loss)Income Before Income TaxesSales RevenuesNet SalesInterest ExpenseOther Expenses and LossesIncome From OperationsOther Revenues and GainsRetained Earnings, December 31Operating ExpensesDividendsIncome Tax ExpenseRetained Earnings, January 1 |
1,075,000 |
enter percentages |
% |
298,000 |
enter percentages |
% |
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select a summarizing line for the first part Cost of Goods SoldDividendsOther Revenues and GainsNet SalesTotal ExpensesSales RevenuesGross ProfitIncome Tax ExpenseRetained Earnings, December 31Operating ExpensesIncome Before Income TaxesIncome From OperationsExpensesNet Income / (Loss)Other Expenses and LossesTotal RevenuesInterest ExpenseRetained Earnings, January 1Total Operating Expenses |
817,000 |
enter percentages |
% |
282,000 |
enter percentages |
% |
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select an income statement item Net SalesIncome From OperationsCost of Goods SoldOther Expenses and LossesDividendsOther Revenues and GainsIncome Tax ExpenseExpensesTotal ExpensesNet Income / (Loss)Interest ExpenseTotal Operating ExpensesIncome Before Income TaxesRetained Earnings, January 1Retained Earnings, December 31Total RevenuesGross ProfitSales RevenuesOperating Expenses |
260,000 |
enter percentages |
% |
87,000 |
enter percentages |
% |
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select a summarizing line for the second part Income Tax ExpenseCost of Goods SoldNet Income / (Loss)Income From OperationsNet SalesTotal Operating ExpensesGross ProfitIncome Before Income TaxesDividendsOther Expenses and LossesTotal RevenuesInterest ExpenseTotal ExpensesExpensesOperating ExpensesSales RevenuesOther Revenues and GainsRetained Earnings, January 1Retained Earnings, December 31 |
557,000 |
enter percentages |
% |
195,000 |
enter percentages |
% |
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select an opening section name Operating ExpensesSales RevenuesTotal ExpensesGross ProfitIncome Before Income TaxesCost of Goods SoldExpensesRetained Earnings, December 31Net Income / (Loss)Income From OperationsRetained Earnings, January 1Other Expenses and LossesIncome Tax ExpenseTotal Operating ExpensesNet SalesTotal RevenuesDividendsOther Revenues and GainsInterest Expense |
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select an income statement item Interest ExpenseNet SalesGross ProfitTotal Operating ExpensesRetained Earnings, January 1Other Revenues and GainsExpensesIncome Tax ExpenseIncome From OperationsRetained Earnings, December 31Total ExpensesSales RevenuesOperating ExpensesNet Income / (Loss)Total RevenuesCost of Goods SoldIncome Before Income TaxesOther Expenses and LossesDividends |
8,200 |
enter percentages |
% |
2,200 |
enter percentages |
% |
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select a summarizing line for the third part Other Revenues and GainsGross ProfitExpensesIncome Tax ExpenseRetained Earnings, January 1Total RevenuesRetained Earnings, December 31Total Operating ExpensesIncome Before Income TaxesIncome From OperationsDividendsSales RevenuesNet Income / (Loss)Net SalesInterest ExpenseCost of Goods SoldOther Expenses and LossesTotal ExpensesOperating Expenses |
548,800 |
enter percentages |
% |
192,800 |
enter percentages |
% |
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select an income statement item Interest ExpenseExpensesTotal RevenuesGross ProfitTotal ExpensesNet SalesCost of Goods SoldRetained Earnings, January 1Total Operating ExpensesIncome From OperationsRetained Earnings, December 31Net Income / (Loss)DividendsOperating ExpensesSales RevenuesIncome Before Income TaxesOther Revenues and GainsIncome Tax ExpenseOther Expenses and Losses |
65,300 |
enter percentages |
% |
29,000 |
enter percentages |
% |
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select a closing name for this statement ExpensesIncome From OperationsNet SalesOperating ExpensesNet Income / (Loss)Total ExpensesIncome Tax ExpenseCost of Goods SoldOther Expenses and LossesRetained Earnings, January 1Interest ExpenseTotal RevenuesIncome Before Income TaxesOther Revenues and GainsTotal Operating ExpensesSales RevenuesDividendsRetained Earnings, December 31Gross Profit |
$483,500 |
enter percentages |
% |
$163,800 |
enter percentages |
% |
(b1)
Compute the 2022 return on assets and the return on common
stockholders’ equity for both companies. (Round all
ratios to 1 decimal place, e.g. 2.5%.)
Wildhorse Company |
Sandhill Company |
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Return on assets |
enter percentages |
% |
enter percentages |
% |
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Return on common stockholders’ equity |
enter percentages |
% |
enter percentages |
% |
Comparative Income Statement | ||||
Years ended Dec 31 | ||||
Vertical Analysis for 2022 | ||||
Wildhorse Company | Percentage | Sandhill Company | Percentage | |
Net Sales | $1,892,000 | 100.0% | $580,000 | 100.0% |
Less:Cost of goods sold | $1,075,000 | 56.8% | $298,000 | 51.4% |
Gross Profit | $817,000 | 43.2% | $282,000 | 48.6% |
Less:Operating expenses | $260,000 | 13.7% | $87,000 | 15.0% |
Income from Operations | $557,000 | 29.4% | $195,000 | 33.6% |
Other Revenues & (Expenses) | ||||
Less:Interest expenses | $8,200 | 0.4% | $2,200 | 0.4% |
Income before taxes | $548,800 | 29.0% | $192,800 | 33.2% |
Income tax expenses | $65,300 | 3.5% | $29,000 | 5.0% |
Net Income | $483,500 | 25.6% | $163,800 | 28.2% |
Return on Assets =Net Income / Average Total Assets | ||||
Particulars | Wildhorse Company | Sandhill Company | ||
2022 | 2021 | 2022 | 2021 | |
Current Assets | $498,742 | $477,987 | $127,504 | $121,585 |
Plant Assets | $806,004 | $765,000 | $213,784 | $192,492 |
Total Assets | $1,304,746 | $1,242,987 | $341,288 | $314,077 |
Average Total Assets(a) | $1,273,867 | $327,683 | ||
Net Income(b) | $483,500 | $163,800 | ||
Return on Assets(b/a) | 38.0% | 50.0% | ||
Return on Common Stockholders Equity =Net Income / Average Common Stockholders Equity | ||||
Particulars | Wildhorse Company | Sandhill Company | ||
2022 | 2021 | 2022 | 2021 | |
Common Stock | $765,000 | $765,000 | $183,600 | $183,600 |
Retained Earnings | $263,864 | $224,920 | $58,287 | $45,897 |
Total Assets | $1,028,864 | $989,920 | $241,887 | $229,497 |
Average Total Assets(a) | $1,009,392 | $235,692 | ||
Net Income(b) | $483,500 | $163,800 | ||
Return on Assets(b/a) | 47.9% | 69.5% | ||