Question
In: Accounting
Financial ratios, along with common-size and trend statements, provide analysts with powerful tools for tracking a...
Financial ratios, along with common-size and trend statements, provide analysts with powerful tools for tracking a company's performance over time, for making comparisons among different companies and within the industry, and for assessing compliance with various benchmarks. Discuss what some of the limitations to the use of these tools might be? For example, what do you need to consider when evaluating the results and using them for decision-making purposes.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Problem 3-18 Common-Size and Common-Base-Year Financial Statements In addition to common-size financial statements, common-base-year financial statements...
Problem 3-18 Common-Size and Common-Base-Year Financial
Statements
In addition to common-size financial statements,
common-base-year financial statements are often used. Common-base
year financial statements are constructed by dividing the
current-year account value by base-year account value. Thus, the
result shows the growth rate in the account.
Prepare the common-size balance sheet and common-base-year balance
sheet for the company. Use 2016 as the base-year. (Do not
round intermediate calculations. Enter all common-size answers as a
percent. Round your common-size answers to...
Required information Problem 13-2A Ratios, common-size statements, and trend percents LO P1, P2, P3 [The following...
Required information
Problem 13-2A Ratios, common-size statements, and trend percents
LO P1, P2, P3
[The following information applies to the questions
displayed below.]
Selected comparative financial statements of Korbin Company
follow.
KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2019, 2018, and
2017
2019
2018
2017
Sales
$
430,373
$
329,701
$
228,800
Cost of goods sold
259,085
207,052
146,432
Gross profit
171,288
122,649
82,368
Selling expenses
61,113
45,499
30,202
Administrative expenses
38,734
29,014
18,990
Total expenses
99,847...
Problem 13-2A Ratios, common-size statements, and trend percents LO P1, P2, P3 [The following information applies...
Problem 13-2A Ratios, common-size statements, and trend percents
LO P1, P2, P3 [The following information applies to the questions
displayed below.] Selected comparative financial statements of
Korbin Company follow. KORBIN COMPANY Comparative Income Statements
For Years Ended December 31, 2019, 2018, and 2017 2019 2018 2017
Sales $ 555,000 $ 340,000 $ 278,000 Cost of goods sold 283,500
212,500 153,900 Gross profit 271,500 127,500 124,100 Selling
expenses 102,900 46,920 50,800 Administrative expenses 50,668
29,920 22,800 Total expenses 153,568 76,840 73,600...
Required information Problem 17-2A Ratios, common-size statements, and trend percents LO P1, P2, P3 [The following...
Required information
Problem 17-2A Ratios, common-size statements, and trend percents
LO P1, P2, P3
[The following information applies to the questions
displayed below.]
Selected comparative financial statements of Korbin Company
follow:
KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2017, 2016, and 2015
2017
2016
2015
Sales
$
480,784
$
368,320
$
255,600
Cost of goods sold
289,432
230,568
163,584
Gross profit
191,352
137,752
92,016
Selling expenses
68,271
50,828
33,739
Administrative expenses
43,271
32,412
21,215
Total expenses
111,542...
Required information Problem 17-2A Ratios, common-size statements, and trend percents LO P1, P2, P3 [The following...
Required information
Problem 17-2A Ratios, common-size statements, and trend percents
LO P1, P2, P3
[The following information applies to the questions
displayed below.]
Selected comparative financial statements of Korbin Company
follow:
KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2017, 2016, and 2015
2017
2016
2015
Sales
$
449,371
$
344,255
$
238,900
Cost of goods
sold
270,521
217,225
152,896
Gross
profit
178,850
127,030
86,004
Selling
expenses
63,811
47,507
31,535
Administrative
expenses
40,443
30,294
19,829
Total
expenses
104,254...
Required information Problem 17-2A Ratios, common-size statements, and trend percents LO P1, P2, P3 [The following...
Required information
Problem 17-2A Ratios, common-size statements, and trend percents
LO P1, P2, P3
[The following information applies to the questions
displayed below.]
Selected comparative financial statements of Korbin Company
follow:
KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2017, 2016, and
2015
2017
2016
2015
Sales
$
528,561
$
404,921
$
281,000
Cost of goods sold
318,194
253,481
179,840
Gross profit
210,367
151,440
101,160
Selling expenses
75,056
55,879
37,092
Administrative expenses
47,570
35,633
23,323
Total expenses
122,626...
(Analyzing common-size financial statements) Use the common-size financial statements found here: Common-Size Balance Sheet 2016 Cash...
(Analyzing common-size financial statements) Use the
common-size financial statements found here:
Common-Size Balance Sheet
2016
Cash and marketable securities
$
500
1.5
%
Accounts receivable
6,000
18.2
Inventory
9,450
28.7
Total current assets
$
15,950
48.4
%
Net property, plant, and equipment
16,980
51.6
Total assets
$
32,930
100.0
%
Accounts payable
$
7,240
22.0
%
Short-term notes
6,750
20.5
Total current liabilities
$
13,990
42.5
%
Long-term liabilities
6,990
21.2
Total liabilities
$
20,980
63.7
%
Total common shareholders’...
Ratios from Comparative and Common-Size Data Consider the following financial statements for Nixon Company. During the...
Ratios from Comparative and Common-Size
Data
Consider the following financial statements for Nixon
Company.
During the year, management obtained additional bond financing
to enlarge its production facilities. The plant addition produced a
new high-margin product, which is supposed to improve the average
rate of gross profit and return on sales.
As a potential investor, you decide to analyze the financial
statements:
NIXON COMPANY
Balance Sheets
(Thousands of Dollars)
Dec. 31, 2019
Dec. 31, 2018
Assets
Cash
$25,000
$18,100
Accounts receivable...
(Analyzing common-size financial statements) Use the common-size financial statements found here: LOADING... to respond to your...
(Analyzing common-size financial statements) Use the
common-size financial statements found here: LOADING... to respond
to your boss' request that you write up your assessment of the
firm's financial condition. Specifically, write up a brief
narrative that responds to the following questions: a. How much
cash does Patterson have on hand relative to its total assets? b.
What proportion of Patterson's assets has the firm financed using
short-term debt? Long-term debt? c. What percent of Patterson's
revenues does the firm have...
How financial analysts classify the ratios used during an analysis of a company's financial statements. What...
How financial analysts classify the ratios used during an
analysis of a company's financial statements. What does each type
of ratio tell us and provide a single example of each and why it is
classified in that manner.
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