Question
In: Accounting
Compute trend percentages for each item for 2013 through 2016. Use 2012 as the base year...
Compute trend percentages for each item for 2013 through 2016. Use 2012 as the base year and round to the nearest percent.
2. Compute the rate of return on net sales for 2014 through 2016. Explain what this means.
3. Compute asset turnover for 2014 through 2016. Explain what this means.
4. Use DuPont Analysis to compute rate of return on average total assets (ROA) for 2014 through 2016.
5. How does AccurateShipping's return on net sales for 2016 compare with previous years? How does it compare with that of the industry? In the shippingindustry, rates above 9% are considered good, and rates above 11% are outstanding.
6. Evaluate Accurate Shipping, Inc.'s ROA for 2016, compared with previous years and against an 18% benchmark for the industry.
Information to fill in
(In thousands) 2016 2015 2014 2013 2012
Net Sales.......................................$ 1,000 $ 920 $492 $308 $306
Net income................................. 41 34 11 39 24
Total assets................................. 300 266 262 230 208
Requirement 1. Compute trend percentages for each item for 2013 through 2016. Use 2012
as the base year and round to the nearest percent.
|
Accurate Shipping, Inc. - Trend Percentages |
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2016 |
2015 |
2014 |
2013 |
2012 |
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Net sales. . . . . . . . . . . . . . . |
% |
% |
% |
% |
100 |
% |
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|
Net income. . . . . . . . . . . . |
% |
% |
% |
% |
100 |
% |
||||||
|
Total assets. . . . . . . . . . . . . |
% |
% |
% |
% |
100 |
% |
||||||
Requirement 2. Compute the rate of return on net sales for
20142014
through
20162016.
Explain what this means.
Begin by selecting the rate of return on net sales (return on sales) formula and then enter the amounts to calculate the percentages. (Enter amounts in thousands as provided to you in the problem statement. Enter "0" for zero amounts and enter the return on sales amounts as percentages rounded to one-tenth percent, X.X%.)
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( |
- |
) / |
= |
Return on sales |
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|
2014 |
( |
- |
) / |
= |
% |
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|
2015 |
( |
- |
) / |
= |
% |
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|
2016 |
( |
- |
) / |
= |
% |
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Explain what this means.
Return on sales measures
▼
the ability to collect cash from credit customers.
the amount of net income for each dollar of net sales.
the amount of net sales per dollar invested in assets.
the percentage of a stock's market value returned as dividends to stockholders.
Requirement 3. Compute asset turnover for
20142014
through
20162016.
Explain what this means.
Begin by selecting the asset turnover formula and then enter the amounts to calculate the ratios. (Enter amounts in thousands as provided to you in the problem statement. Do not round until your final answer, then enter the asset turnover amounts rounded to three decimal places, .XXX.)
|
/ |
= |
Asset turnover |
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|
2014 |
/ |
= |
||||
|
2015 |
/ |
= |
||||
|
2016 |
/ |
= |
||||
Explain what this means.
Asset turnover means
▼
the ability to collect cash from credit customers.
the amount of net income for each dollar of net sales.
the amount of net sales per dollar invested in assets.
the percentage of a stock's market value returned as dividends to stockholders.
Requirement 4. Use DuPont Analysis to compute rate of return on average total assets (ROA) for
20142014
through
20162016.
Begin by selecting the ROA formula using the DuPont analysis and then enter the amounts to calculate the ratio. (Enter percentages rounded to one-tenth percent, X.X%. Enter other component ratios as decimals to three places, .XXX.)
|
x |
= |
ROA |
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|
2014 |
% |
x |
= |
% |
|||
|
2015 |
% |
x |
= |
% |
|||
|
2016 |
% |
x |
= |
% |
|||
Requirement 5. How does Accurate Shipping's return on net sales for 2016 compare with previous years? How does it compare with that of the industry? In the shipping industry, rates above 9% are considered good, and rates above 11% are outstanding.
Accurate Shipping's rate of return on net sales for 2016 compares ▼( unfavorably, favorably) with the industry rate of 9%. It's 2016 rate of return on net sales has ▼ (improved,deteriorated) from 2015 and (improved,deteriorated) from 2014.
Requirement 6. Evaluate Accurate Shipping, Inc.'s ROA for 2016, compared with previous years and against an 18% benchmark for the industry. Accurate Shipping's return on assets (ROA) for 2016 compares ▼ (unfavorably, favorably) with the 18% benchmark for the industry. It's 2016 ROA has ▼ (deteriorated, improved) from 2015 and ▼ (improved,deteriorated) from 2014.
Solutions
Expert Solution
Requirement 1
| Particulars | Trend Percentage | |||||||||
| 2016 | 2015 | 2014 | 2013 | 2012 | ||||||
| Net Sales | $ 1,000.00 | 327% | $ 920.00 | 301% | $ 492.00 | 161% | $ 308.00 | 101% | $ 306.00 | 100% |
| Net Income | $ 41.00 | 171% | $ 34.00 | 142% | $ 11.00 | 46% | $ 39.00 | 163% | $ 24.00 | 100% |
| Total Asset | $ 300.00 | 144% | $ 266.00 | 128% | $ 262.00 | 126% | $ 230.00 | 111% | $ 208.00 | 100% |
| Trend Percentage = Amount for the particular year / Amount for the year (2012) | ||||||||||
Requirement 2
Rate of return on net sales
| Particulars | 2016 | 2015 | 2014 |
| Net Sales | $ 1,000.00 | $ 920.00 | $ 492.00 |
| Net Income | $ 41.00 | $ 34.00 | $ 11.00 |
| Rate of Return | 4.10% | 3.70% | 2.24% |
| Rate of Return = Net Income / Net Sales | |||
Return on sales measures the amount of net income for each dollar of net sales.
Requirement 3
Asset turnover
| Particulars | 2016 | 2015 | 2014 |
| Net Sales | $ 1,000.00 | $ 920.00 | $ 492.00 |
| Opeing Assets balance | $ 266.00 | $ 262.00 | $ 230.00 |
| Closing Assets Balance | $ 300.00 | $ 266.00 | $ 262.00 |
| Average Assets | $ 283.00 | $ 264.00 | $ 246.00 |
| Assets Turnover | 3.53 | 3.48 | 2.00 |
| Assets Turnover = Net Sales / Average Assets | |||
Asset turnover means the amount of net sales per dollar invested in assets.
Requirement 4
DuPont Analysis to compute rate of return on asset
| Particulars | 2016 | 2015 | 2014 | |
| Return on Sales (A) in % | 4.10 | 3.70 | 2.24 | |
| Asset Turn Over (B) in times | 3.53 | 3.48 | 2.00 | |
| Return on Asset (A x B) in % | 14.47 | 12.88 | 4.48 | approx |
Requirement 5
return on net sales for 2016 = 4.10%
return on net sales for 2015 = 3.70%
return on net sales for 2014 = 2.24%
It's 2016 rate of return on net sales has ▼ (improved) from 2015 and (improved) from 2014.
Accurate Shipping's rate of return on net sales for 2016 compares ▼( unfavorably) with the industry rate of 9%.
Requirement 6
Accurate Shipping's return on assets (ROA) for 2016 = 14.47%
Accurate Shipping's return on assets (ROA) for 2015 = 12.88%
Accurate Shipping's return on assets (ROA) for 2014 = 4.48%
It's 2016 ROA has ▼ ( improved) from 2015 and ▼ (improved) from 2014.
Accurate Shipping's return on assets (ROA) for 2016 compares ▼ (unfavorably) with the 18% benchmark for the industry.
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