Question
In: Accounting
Comparative income statement data for Carla Vista Inc. and Martinez Ltd., two competitors, are shown below...
Comparative income statement data for Carla Vista Inc. and
Martinez Ltd., two competitors, are shown below for the year ended
December 31, 2021.
| Carla Vista | Martinez | |||
| Net sales | $1,920,000 | $563,000 | ||
| Cost of goods sold | 1,102,080 | 356,942 | ||
| Gross profit | 817,920 | 206,058 | ||
| Operating expenses | 556,800 | 87,828 | ||
| Profit from operations | 261,120 | 118,230 | ||
| Interest expense | 6,960 | 1,252 | ||
| Profit before income tax | 254,160 | 116,978 | ||
| Income tax expense | 76,248 | 29,245 | ||
| Profit | $177,912 | $87,733 |
| Additional information: | ||||
| Average total assets | $894,000 | $250,563 | ||
| Average total shareholders’ equity | 751,000 | 212,808 |
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Solve
1) Using vertical analysis, calculate the percentage of the base amount of the income statement for each company. (Round answers to 1 decimal place, e.g. 12.5%.)
2)
Calculate the gross profit margin, profit margin, asset turnover,
return on assets, and return on equity ratios for 2021 for each
company. (Round answers to 1 decimal place, e.g. 12.5
or 12.5%.)
Solutions
Expert Solution
1) Vertical analysis : ($)
| Carlavista | percentage | Martinez | percentage | ||
| a | Net sales | 19,20,000 | 100% | 563,000 | 100% |
| b | Less: cost of goods sold | (11,02,080) |
11,02,080/19,20,000 = 57.4% |
(356,942) |
356,942/563,000 = 63.4% |
| c | gross profit | 817,920 |
100-57.4 = 42.6% |
206,058 |
100-63.4 = 36.6% |
| d | Less: Operating expenses | (556,800) |
556,800/19,20,000 = 29% |
(87,828) |
87,828/563,000 = 15.6% |
| e | profit from operations | 261,120 |
42.6-29 = 13.6% |
118,230 |
36.6-15.6 = 21% |
| f | Less: interest | (6,960) |
6,960/19,20,000 = 0.4% |
(1,252) |
1,252/563,000 = 0.2% |
| g | profit before income tax | 254,160 |
13.6-0.4 = 13.2% |
116,978 |
21-0.2 = 20.8% |
| h | Less: Income tax | (76,248) |
76,248/19,20,000 = 4% |
(29,245) |
29,245/563,000 = 5.2% |
| g | Net profit | 177,912 |
13.2-4 = 9.2% |
87,733 |
20.8-5.2 = 15.6% |
2) Ratio analysis :
| Formula | carlavista | martinez | ||
| a | Gross profit margin | gross profit/net sales |
817,920/19,20,000 = 42.6% |
206,058/563,000 = 36.6% |
| b | Profit margin | net profit/net sales |
177,912/19,20,000 = 9.2% |
87,733/563,000 = 15.6% |
| c | Assets turnover | turnover/average total assets |
19,20,000/894,000 = 2.1 times |
563,000/250,563 = 2.2 times |
| d | Return on assets | net profit/average total assets |
177,912/894,000 = 20% |
87,733/250,563 = 35% |
| e | Return on equity | net profit/average shareholders equity |
177,912/751,000 = 23.7% |
87,733/212,808 = 41.2% |
ekkarill92 answered 3 years agoRelated Solutions
The comparative unclassified statement of financial position for Carla Vista Ltd. follows: CARLA VISTA LTD. Statement...
The comparative unclassified statement of financial position for
Carla Vista Ltd. follows:
CARLA VISTA
LTD.
Statement of Financial Position
December 31
Assets
2018
2017
Cash
$55,000
$28,000
Accounts receivable
81,000
63,000
Inventory
183,000
203,500
Long-term investments
80,000
120,000
Equipment
285,000
156,000
Accumulated depreciation
(61,000
)
(37,000
)
Total assets
$623,000
$533,500
Liabilities and Shareholders’
Equity
Accounts payable
$32,000
$ 45,000
Bank loan payable
153,000
172,500
Common shares
219,000
176,000
Retained earnings
219,000
140,000
Total liabilities and shareholders’
equity
$623,000
$533,500...
Here are the comparative income statements of Carla Vista Corporation. CARLA VISTA CORPORATION Comparative Income Statement...
Here are the comparative income statements of Carla Vista
Corporation.
CARLA VISTA CORPORATION
Comparative Income Statement
For the Years Ended December 31
2022
2021
Net sales
$637,500
$555,200
Cost of goods sold
454,100
418,600
Gross Profit
183,400
136,600
Operating expenses
74,500
48,700
Net income
$ 108,900
$ 87,900
(a)
Prepare a horizontal analysis of the income statement data for
Carla Vista Corporation, using 2021 as a base. (If
amount and percentage are a decrease show the numbers as negative,
e.g....
Shown below are comparative balance sheets for Carla Vista Company. Carla Vista Company Comparative Balance Sheets...
Shown below are comparative balance sheets for Carla Vista
Company.
Carla Vista Company
Comparative Balance Sheets
December 31
Assets
2022
2021
Cash
$ 170,000
$ 55,000
Accounts receivable
220,000
190,000
Inventory
417,500
472,500
Land
200,000
250,000
Equipment
650,000
500,000
Accumulated depreciation—equipment
(165,000
)
(80,000
)
Total
$1,492,500
$1,387,500
Liabilities and Stockholders’ Equity
Accounts payable
$ 97,500
$ 107,500
Bonds payable
375,000
500,000
Common stock ($1 par)
540,000
435,000
Retained earnings
480,000
345,000
Total
$1,492,500
$1,387,500
Additional information:
1.
Net income...
Here are the comparative income statements of Carla VistaCorporation.CARLA VISTA CORPORATIONComparative Income Statement...
Here are the comparative income statements of Carla Vista Corporation.
CARLA VISTA CORPORATIONComparative Income StatementFor the Years Ended December 31
2022
2021
Net sales
$610,300
$540,600
Cost of goods sold
448,800
426,200
Gross Profit
161,500
114,400
Operating expenses
76,400
48,100
Net income
$ 85,100
$ 66,300
(a)Prepare a horizontal analysis of the income statement data for Carla Vista Corporation, using 2021 as...
Here are the comparative income statements of Carla VistaCorporation.CARLA VISTA CORPORATIONComparative Income Statement...
Here are the comparative income statements of Carla Vista Corporation.
CARLA VISTA CORPORATIONComparative Income StatementFor the Years Ended December 31
2022
2021
Net sales
$610,300
$540,600
Cost of goods sold
448,800
426,200
Gross Profit
161,500
114,400
Operating expenses
76,400
48,100
Net income
$ 85,100
$ 66,300
Prepare a vertical analysis of the income statement data for Carla Vista Corporation for both years....
Carla Vista Shoes’ comparative balance sheet is presented below. Carla Vista reports under ASPE. CARLA VISTA...
Carla Vista Shoes’ comparative balance sheet is presented below.
Carla Vista reports under ASPE.
CARLA
VISTA SHOES
Balance Sheet
December 31
Assets
2021
2020
Cash
$25,380
$15,930
Accounts receivable
21,780
20,070
Long-term investments
20,700
14,400
Equipment
54,000
63,000
Accumulated
depreciation—equipment
(12,600
)
(9,000
)
Total
$109,260
$104,400
Liabilities and Shareholders’ Equity
Accounts payable
$17,640
$9,990
Notes payable
9,000
27,000
Common shares
54,000
40,500
Retained earnings
28,620
26,910
Total
$109,260
$104,400
Additional Information:
1.
Profit was $25,470. Dividends
declared and paid...
Condensed statement of financial position and income statement data for Richetti Ltd. are shown below: RICHETTI...
Condensed statement of financial position and income statement
data for Richetti Ltd. are shown below:
RICHETTI
LTD.
Statement of Financial Position
December 31
(in thousands)
2018
2017
2016
Assets
Current assets
Cash
$28
$81
$200
Accounts receivable
908
707
497
Inventory
1,188
794
504
Total current assets
2,124
1,582
1,201
Property, plant, and equipment (net)
4,076
3,778
3,195
Total assets
$6,200
$5,360
$4,396
Liabilities and
Shareholders’ Equity
Liabilities
Current
liabilities
$600
$553
$497
Non-current
liabilities
3,042
2,330
1,491
Total liabilities...
Presented below are the comparative income and retained earnings statements for Martinez Inc. for the years...
Presented below are the comparative income and retained earnings
statements for Martinez Inc. for the years 2017 and 2018.
2018
2017
Sales
$334,000
$264,000
Cost of sales
217,000
144,000
Gross profit
117,000
120,000
Expenses
95,200
50,700
Net income
$21,800
$69,300
Retained earnings (Jan. 1)
$121,700
$76,300
Net income
21,800
69,300
Dividends
(31,400
)
(23,900
)
Retained earnings (Dec. 31)
$112,100
$121,700
The following additional information is provided:
1.
In 2018, Martinez Inc. decided to switch its depreciation
method from sum-of-the-years’...
Presented below are the comparative income and retained earnings statements for Martinez Inc. for the years...
Presented below are the comparative income and retained earnings
statements for Martinez Inc. for the years 2017 and 2018.
2018
2017
Sales
$334,000
$264,000
Cost of sales
217,000
144,000
Gross profit
117,000
120,000
Expenses
95,200
50,700
Net income
$21,800
$69,300
Retained earnings (Jan.
1)
$121,700
$76,300
Net income
21,800
69,300
Dividends
(31,400
)
(23,900
)
Retained earnings (Dec.
31)
$112,100
$121,700
The following additional information is provided:
1.
In 2018, Martinez Inc. decided
to switch its depreciation method from sum-of-the-years’...
Selected financial statement information and additional data for Carla Vista Co. is presented below. December 31...
Selected financial statement information and additional data for
Carla Vista Co. is presented below.
December
31
2019
2020
Cash
$41,000
$80,800
Accounts
receivable (net)
83,000
141,000
Inventory
168,000
202,000
Land
58,000
18,000
Equipment
502,000
788,000
TOTAL
$852,000
$1,229,800
Accumulated
depreciation
$85,000
$117,000
Accounts
payable
50,000
86,000
Notes payable -
short-term
67,000
31,000
Notes payable -
long-term
167,000
302,000
Common stock
423,000
491,000
Retained
earnings
60,000
202,800
TOTAL
$852,000
$1,229,800
Additional data
for 2020:
1.
Net income was $224,000.
2.
Depreciation...
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