Question

In: Accounting

Common-size and trend percentages for a company’s net sales, cost of goods sold, and expenses follow:...

Common-size and trend percentages for a company’s net sales, cost of goods sold, and expenses follow:

Common-Size Percentages

Trend Percentages

2017 2016 2015 2017 2016 2015
  Net sales 100.0 % 100.0 % 100.0 % 108.1 % 106.5 % 100.0 %
  Cost of goods sold 57.9 54.8 51.6 115.9 112.0 100.0
  Expenses 24.1 21.9 22.4 111.9 104.8 100.0


Required:
a.
Calculate the profit percentage for 2015, 2016 and 2017. (Round the final answers to 2 decimal places.)   

Profit Percentage
2015 %
2016 %
2017 %

b. Determine whether the company’s profit increased, decreased, or remained unchanged during this three-year period.    

Solutions

Expert Solution

  • All working forms part of the answer
  • Requirement ‘a’: Profit percentage using common size data

Working

Common-Size Percentages

2017

2016

2015

A

  Net sales

100%

100%

100%

B

  Cost of goods sold

57.9%

54.8%

51.6%

C

  Expenses

24.1%

21.9%

22.4%

D=A - B - C

Profit Percentage

18.00%

23.30%

26.00%

  • Requirement ‘b’:

The above profit percentage in Requirement ‘a’ shows that percentage of profit is FALLING. But this percentage is percent of Sale of that year.

TO determine whether company’s profit has increased/decreased overtime, we have to go through TREND PERCENTAGE analysis.

It shows that when compared to 2015, 2017’s expenses have increased at higher rate as compared to increase in Net Sales. This suggests that Profits would have decreased because the increase in Net Sales (Revenue) have been less than increases in Expenses.

Hence, the profits have DECREASED during the period of 3 years.


Related Solutions

Common size and trend percents for Rustynail Company s sales,cost of goods sold,and expenses follow. Common...
Common size and trend percents for Rustynail Company s sales,cost of goods sold,and expenses follow. Common size percents. 2017 sales 100 % 2016 sales 100 %,2015 sales 100 %. Cost of goods sold 2017. 63.1 . 2016 60.9. 2015. 57.4. Total expenses. 2017 , 14.3 , 2016. 13.8. 2015. 14.1 Trend percents. 2017.              2016           2015             sales.                   104.5%           103.3 %     100 cost of goods sold 114.9.        109.6.       100 total expenses.         106.1.        101.1.      100
Calculate net sales: Cost of goods sold $74,500 Sales revenue $112,800 Operating expenses $23,600 Sales returns...
Calculate net sales: Cost of goods sold $74,500 Sales revenue $112,800 Operating expenses $23,600 Sales returns $4,600 Sales discounts $6,700 Inventory purchases $80,530
1. To adjust a company’s LIFO cost of goods sold to FIFO cost of goods sold...
1. To adjust a company’s LIFO cost of goods sold to FIFO cost of goods sold the ending LIFO reserve is added to LIFO cost of goods sold. the ending LIFO reserve is subtracted from LIFO cost of goods sold. an increase in the LIFO reserve is subtracted from LIFO cost of goods sold. a decrease in the LIFO reserve is subtracted from LIFO cost of goods sold. 2. All of the following statements are true regarding the LIFO reserve...
Figures are in millions of dollars Net sales $ 2,473.8 Cost of goods sold (COGS) $...
Figures are in millions of dollars Net sales $ 2,473.8 Cost of goods sold (COGS) $ 1,316.2 Operating expenses (S&GA) $ 575.8 Inventory $ 250.1 Accounts receivable $ 36.7 Other current assets $ 68.9 Fixed assets $ 690.0 What's the net profit margin? $____ Show work. What's the net profit margin %? _____ Show work. What's the value of total assets? $____ Show work. What's the asset turnover ? $____ Show work. What's the return on assets (ROA)? $____ Show...
The following information from Jefferson Company’s operations is available: Administrative expenses $145,000 Cost of goods sold...
The following information from Jefferson Company’s operations is available: Administrative expenses $145,000 Cost of goods sold 928,000 Sales revenue 1,850,000 Selling expenses 174,000 Interest expense 14,000 Loss from operations of discontinued segment 120,000 Gain on disposal of discontinued segment 90,000 Income taxes: Amount applicable to ordinary operations 125,000 Reduction applicable to loss from operations of discontinued segment 22,000 Amount applicable to gain on disposal of discontinued segment 15,000 Required a. Prepare a multiple-step income statement. (Disregard earnings per share amounts.)...
Sales $50,400,000 Cost of goods sold $31,500,000 Variable expenses $6,300,000 Fixed expenses $7,150,000 Inventory $9,150,000 Accounts...
Sales $50,400,000 Cost of goods sold $31,500,000 Variable expenses $6,300,000 Fixed expenses $7,150,000 Inventory $9,150,000 Accounts receivable $5,150,000 Other current assets $4,150,000 Fixed assets $7,150,000 a) What is the Net Profit Margin in PERCENT % (rounded to two decimal places)? b) What is the Asset Turnover rounded to two decimal places? c) What is the Return on Assets in PERCENT % (rounded to two decimal places)? d) What is the Size of the Total Assets used by the firm?
Consider a company with sales of $18,000.0 million, cost of goods sold of 42% of sales, other expenses including salaries
Consider a company with sales of $18,000.0 million, cost of goods sold of 42% of sales, other expenses including salaries ( we usually call this SG&A for selling, general and administrative) of 1750.0million, depreciation of 2250.0 million, and interest expense of 2300 million. tax rate =21%.a. generate an income statement and show net incomeb. what is the company's operating cash flow?c. if there are 775.2 million shares outstanding, what is the EPS?d. if the company has a payout ratio of...
BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation...
BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation expense of $10,000, and interest expense of $30,000. What is the net income for the firm using the following tax schedule? Taxable Income Tax Rate $ 1-50,000 10% $ 50,001-75,000 20% $ 75,001-100,000 30% $100,001-335,000 40% $335,001 + 50%
Current Expenses Average monthly sales over the last quarter was $20,000 Cost of goods sold is...
Current Expenses Average monthly sales over the last quarter was $20,000 Cost of goods sold is $10,000 Promotional costs are $1000 “Other” fixed costs are $1000 Taxes are 30% of your operating profit This leaves you with $5,600 a month, of which, you need $5000 to live on Expansion Costs You have found a commercial office and storage space for $1500 a month. You estimate it would cost you about $1500 a month to hire someone to work 20 hours...
Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of...
Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of $198,000, average invested assets of $4,400,000, and a hurdle rate of 11 percent. Required: 1. Determine Kaler’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin answer to the nearest whole percentage, (i.e., 0.1234 should be entered as 12%). Round your Investment Turnover answers to 4 decimal places.) Please calculate...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT