Question

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			83,240			54,954
Income before taxes		79,810			54,512			37,062
Income taxes		14,845			11,175			7,524
Net income	$	64,965		$	43,337		$	29,538

KORBIN COMPANY
Comparative Balance Sheets
December 31, 2017, 2016, and 2015
	2017			2016			2015
Assets
Current assets	$	52,332		$	40,943		$	54,731
Long-term investments		0			800			3,770
Plant assets, net		97,187			103,446			61,788
Total assets	$	149,519		$	145,189		$	120,289
Liabilities and Equity
Current liabilities	$	21,830		$	21,633		$	21,051
Common stock		66,000			66,000			48,000
Other paid-in capital		8,250			8,250			5,333
Retained earnings		53,439			49,306			45,905
Total liabilities and equity	$	149,519		$	145,189		$	120,289

Problem 17-2A Part 1

Required:
1. Complete the below table to calculate each year's current ratio.

	Current Ratio Choose Numerator: / Choose Denominator: = Current ratio / = Current ratio 2017 / = to 1 2016 / = to 1 2015 / = to 1

2. Complete the below table to calculate income statement data in common-size percents. (Round your percentage answers to 2 decimal places.)

KORBIN COMPANY Common-Size Comparative Income Statements For Years Ended December 31, 2017, 2016, and 2015 2017 2016 2015 Sales % % % Cost of goods sold -1 -1 -1 Gross profit Selling expenses -1 -1 -1 Administrative expenses -1 -1 -1 Total expenses Income before taxes -1 -1 -1 Income taxes -1 -1 -1 Net income % % % 3. Complete the below table to calculate the balance sheet data in trend percents with 2015 as the base year. (Round your percentage answers to 2 decimal places.) KORBIN COMPANY Balance Sheet Data in Trend Percents December 31, 2017, 2016 and 2015 2017 2016 2015 Assets Current assets % % 100.00 % Long-term investments 100.00 Plant assets, net 100.00 Total assets % % 100.00 % Liabilities and Equity Current liabilities % % 100.00 % Common stock 100.00 Other paid-in capital 100.00 Retained earnings 100.00 Total liabilities and equity % % 100.00 %

Answer 1

Answer of part 1:

For 2017:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $52,332 / $21,830
Current Ratio = 2.4 : 1

For 2016:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $40,943 / $21,633
Current Ratio = 1.9: 1

For 2015:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $54,731 / $21,051
Current Ratio = 2.6: 1