Questions
Compute Costco's financial leverage (FLEV), Spread, and noncontrolling interest (NCI) ratio for 2016; recall, NNE =...

Compute Costco's financial leverage (FLEV), Spread, and noncontrolling interest (NCI) ratio for 2016; recall, NNE = NOPAT-Net income. Remember to use negative signs with answers, when appropriate.

Costco Wholesale Corporation
Consolidated Statements of Earnings
For Fiscal Years Ended ($ millions) August 28, 2016 August 30, 2015 August 31, 2014
Revenue
Net Sales $116,073 $113,666 $110,212
Membership fees 2,646 2,533 2,428
Total revenue 118,719 116,199 112,640
Operating expenses
Merchandise costs 102,901 101,065 98,458
Selling, general and administrative 12,068 11,445 10,899
Preopening expenses 78 65 63
Operating Income 3,672 3,624 3,220
Other income (expense)
Interest expense (133) (124) (113)
Interest income and other, net 80 104 90
Income before income taxes 3,619 3,604 3,197
Provision for income taxes 1,243 1,195 1,109
Net income including noncontrolling interests 2,376 2,409 2,088
Net income attributable to noncontrolling interests (26) (32) (30)
Net income attributable to Costco $2,350 $2,377 $2,058
Costco Wholesale Corporation
Consolidated Balance Sheets
($ millions, except par value and share data) August 28, 2016 August 30, 2015
Assets
Current assets
Cash and cash equivalents $3,379 $4,801
Short-term investments 1,350 1,618
Receivables, net 1,252 1,224
Merchandise inventories 8,969 8,908
Deferred income taxes and other current assets 268 228
Total current assets 15,218 16,779
Property and equipment
Land 5,395 4,961
Buildings and improvements 13,994 12,618
Equipment and fixtures 6,077 5,274
Construction in progress 701 811
Gross property and equipment 26,167 23,664
Less accumulated depreciation and amortization (9,124) (8,263)
Net property and equipment 17,043 15,401
Other assets 902 837
Total assets $33,163 $33,017
Liabilities and equity
Current liabilities
Accounts payable $7,612 $9,011
Current portion long-term debt $1,100 $1,283
Accrued salaries and benefits 2,629 2,468
Accrued member rewards 869 813
Deferred membership fees 1,362 1,269
Other current liabilities 2,003 1,695
Total current liabilities 15,575 16,539
Long-term debt, excluding current portion 4,061 4,852
Other liabilities 1,195 783
Total liabilities 20,831 22,174
Equity
Preferred stock, $0.005 par value:
100,000,000 shares authorized; no shares issued and outstanding 0 0
Common stock, $0.005 par value:
900,000,000 shares authorized;
437,524,000 and 437,952,000 shares issued and outstanding 2 2
Additional paid-in-capital 5,490 5,218
Accumulated other comprehensive loss (1,099) (1,121)
Retained earnings 7,686 6,518
Total Costco stockholders’ equity 12,079 10,617
Noncontrolling interests 253 226
Total equity 12,332 10,843
Total liabilities and equity $33,163 $33,017


(a) Compute Costco's financial leverage (FLEV), Spread, and noncontrolling interest (NCI) ratio for 2016; recall, NNE = NOPAT-Net income.

Remember to use negative signs with answers, when appropriate.  

2016 NNO =$Answer

million
2015 NNO =$Answer

million  


2016 NNE =$Answer

million
2016 NNEP =Answer

% Round NNEP to two decimal places.   

2016 FLEV        = Answer

  Round FLEV to four decimal places.   
2016 Spread    = Answer

% Round Spread to two decimal places.
2016 NCI ratio = Answer

Round NCI ratio to four decimal places.



(b) Assume that Costco's return on equity (ROE) for 2016 is 20.71% and its return on net operating assets (RNOA) is 20.66%. Confirm computations to yield the relation: ROE = [RNOA + (FLEV X Spread)] X NCI ratio.

2016 ROE =Answer

% = [Answer

%+(Answer

X Answer

%)] X Answer


In: Accounting

Change in Accounting Method Instructions Delta Oil Company uses the successful-efforts method to account for oil...

Change in Accounting Method

Instructions

Delta Oil Company uses the successful-efforts method to account for oil exploration costs. Delta started business in 2014 and prepared the following income statements:

DELTA OIL COMPANY

Income Statements

For the Years Ended December 31, 2014 - 2015

1

2014

2015

2

Revenue

$1,000,000.00

$3,000,000.00

3

Other expenses

400,000.00

1,300,000.00

4

Exploration expenses

120,000.00

238,000.00

5

Income before income taxes

$480,000.00

$1,462,000.00

6

Income tax expense (30%)

144,000.00

438,600.00

7

Net income

$336,000.00

$1,023,400.00

8

Earnings per share

$3.36

$10.23

The company chose to change to the full-cost method at the beginning of 2016. Under the full-cost method, Delta capitalizes all exploration costs of the Oil and Gas Properties asset account on its balance sheet. It determines the exploration and amortization expense amounts under the full-cost method to be as follows:

2014

2015

2016
Exploration expense $0 $0 $0
Amortization expense 8,000 18,200 42,000

In addition, Delta reported revenue of $9,000,000 and other expenses of $4,200,000 in 2016. With the 2016 financial statements, the company issues comparative statements for the previous 2 years.

Required:

1. Prepare the journal entry to reflect the change.
2. Prepare the comparative income statements and the comparative statements of retained earnings for 2016, 2015, and 2014. Notes to the financial statements are not necessary.
3. Next Level Discuss the advantages and disadvantages of accounting for a change in this manner.

Chart of Accounts

CHART OF ACCOUNTS
Delta Oil Company
General Ledger
ASSETS
111 Cash
121 Accounts Receivable
141 Inventory
152 Prepaid Insurance
154 Deferred Tax Asset
172 Oil and Gas Properties
181 Equipment
189 Accumulated Depreciation
LIABILITIES
211 Accounts Payable
231 Salaries Payable
250 Unearned Revenue
260 Deferred Tax Liability
EQUITY
311 Common Stock
331 Retained Earnings
REVENUE
411 Sales Revenue
EXPENSES
500 Cost of Goods Sold
511 Insurance Expense
512 Utilities Expense
521 Salaries Expense
532 Bad Debt Expense
540 Interest Expense
541 Depreciation Expense
542 Amortization Expense
559 Miscellaneous Expenses
910 Income Tax Expense

Amount Descriptions

Amount Descriptions
Adjustment for the cumulative effect of accounting method change
Balance at beginning of year, as previously reported
Balance at beginning of year, as adjusted
Balance at end of year
Income before income taxes
Net income
Other expenses
Revenue

General Journal

Prepare the journal entry to reflect the change on January 1, 2016

PAGE 1

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

1

2

3

Income Statements

Prepare the comparative income statements for 2016, 2015, and 2014. Notes to the financial statements are not necessary. Additional Instructions

DELTA OIL COMPANY

Comparative Income Statements

For the Years Ended December 31, 2014 - 2016

1

2016

2015 As Adjusted

2014 As Adjusted

2

3

4

5

6

7

8

Earnings per share (100,000 shares)

Retained Earnings

Prepare the comparative statements of retained earnings for 2016, 2015, and 2014. Notes to the financial statements are not necessary. Additional Instructions

DELTA OIL COMPANY

Comparative Statements of Retained Earnings

For the Years Ended December 31, 2014 - 2016

1

2016

2015

2014

2

3

4

5

6

Next Level

Discuss the advantages and disadvantages of accounting for a change in this manner.

Advantages and disadvantages of the retrospective adjustment method include:

I. A risk of loss of public confidence due to changing previously reported information
II. Comparability
III. Costs may outweigh benefits
IV. Faithful representation of financial information

In: Accounting

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 77,801 51,364
Income before taxes 74,596 49,229 34,640
Income taxes 13,875 10,092 7,032
Net income $ 60,721 $ 39,137 $ 27,608


KORBIN COMPANY
Comparative Balance Sheets
December 31, 2017, 2016, and 2015
2017 2016 2015
Assets
Current assets $ 45,817 $ 35,846 $ 47,918
Long-term investments 0 1,100 3,610
Plant assets, net 86,412 91,453 54,851
Total assets $ 132,229 $ 128,399 $ 106,379
Liabilities and Equity
Current liabilities $ 19,305 $ 19,131 $ 18,616
Common stock 66,000 66,000 48,000
Other paid-in capital 8,250 8,250 5,333
Retained earnings 38,674 35,018 34,430
Total liabilities and equity $ 132,229 $ 128,399 $ 106,379

Problem 17-2A Part 2

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 3.39 % % %
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 % % %

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 77,801 51,364
Income before taxes 74,596 49,229 34,640
Income taxes 13,875 10,092 7,032
Net income $ 60,721 $ 39,137 $ 27,608


KORBIN COMPANY
Comparative Balance Sheets
December 31, 2017, 2016, and 2015
2017 2016 2015
Assets
Current assets $ 45,817 $ 35,846 $ 47,918
Long-term investments 0 1,100 3,610
Plant assets, net 86,412 91,453 54,851
Total assets $ 132,229 $ 128,399 $ 106,379
Liabilities and Equity
Current liabilities $ 19,305 $ 19,131 $ 18,616
Common stock 66,000 66,000 48,000
Other paid-in capital 8,250 8,250 5,333
Retained earnings 38,674 35,018 34,430
Total liabilities and equity $ 132,229 $ 128,399 $ 106,379

Problem 17-2A Part 3

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 %

In: Accounting

What are the roots of the brachial plexus? What are the major nerves (Terminal nerves) of...

  • What are the roots of the brachial plexus?
  • What are the major nerves (Terminal nerves) of the brachial plexus?
  • What are the roots of the long thoracic nerve?
  • Name 5 muscles that are innervated by the radial nerve
  • Name 5 muscles that are innervated by the mdian nerve
  • Name 5 muscles that are innervated by the ulnar nerve

In: Anatomy and Physiology

Write a program in java which is in main and uses no classes, methods, loops or...

Write a program in java which is in main and uses no classes, methods, loops or if statements Ask the user to enter their first name Ask the user to enter their last name Print their initials followed by periods (ie. Clark Kent = C. K.) Print the number of letters in their last name

In: Computer Science

Linux Directories, File Properties, and the File System in C Understanding Unix/Linux Programming Your version of...

Linux Directories, File Properties, and the File System in C

Understanding Unix/Linux Programming

Your version of mv command

  1. The mv command is more than just a wrapper around the rename system call. Write a version of mv that accepts two argument. The first argument must be the name of a file, and the second argument may be the name of a file or the name of a directory. If the destination is the name of a directory, then mv moves the file into that directory. Otherwise mv rename the file if possible.
  2. Add comments to code.

In: Computer Science

1. Why does America have a bicameral Congress? What are the differences between the two chambers?...

1. Why does America have a bicameral Congress? What are the differences between the two chambers? Name and describe at least three. Why do representatives in the two chambers serve differing term lengths?

2. What powers does Congress have? Name and describe at least four.

3. How are laws made in Congress? Name at least five steps.

4. What are the powers of the President? Name and describe at least five.

5. How does the Electoral College work?

In: Economics

Linux Directories, File Properties, and the File System in C Code your version of mv command...

Linux Directories, File Properties, and the File System in C

Code your version of mv command in C

  1. The mv command is more than just a wrapper around the rename system call. Write a version of mv that accepts two argument. The first argument must be the name of a file, and the second argument may be the name of a file or the name of a directory. If the destination is the name of a directory, then mv moves the file into that directory. Otherwise mv rename the file if possible.
  2. Add comments to code.

In: Computer Science

Create a program using Java. Create two different 3D arrays with random numbers. (lets name them...

Create a program using Java.

Create two different 3D arrays with random numbers. (lets name them array1 and array 2)

Add the two 3Darrays together and then get the average.

Save the average on a separate 3D array.(lets name it array3)

Then add array1 and array3 then get the average

Save the average on a separate 3Darray(lets name it array 4)

Then add array2 and array3 then get the average

Save the average on a separate 3Darray (lets name it array5)

Use recursion

In: Computer Science

Create CRC card, class diagram and an object diagram for the school students' healthcare system that...

Create CRC card, class diagram and an object diagram for the school students' healthcare system that may have the entities represent a system for a student_patient billing system. Include only the attributes that would be appropriate for this context.

Student_Patient (age, name, hobbies, blood type, occupation, insurance carrier, address, phone)

Student_Insurance carrier (name, number of patients on plan, address, contact name, phone)

University_Doctor (specialty, provider identification number, golf handicap, age, phone, name)

In: Computer Science