Select the 10 financial ratios for a 3-year period then compare six (6) common ratios between two other groups.
1) Based on these ratios, which is the stronger company and why?
| Company A | Company B | Company C | |||||||
| Ratio | 2016 | 2017 | 2018 | 2016 | 2017 | 2018 | 2016 | 2017 | 2018 |
| Profitability ratios | |||||||||
| Net Profit Margin (%) | 10.73 | 7.93 | 9.71 | 2.32 | 2.78 | 2.06 | 8.53 | 10.19 | 10.17 |
| EBIT Margin (%) | 16.09 | 11.63 | 14.38 | 5.90 | 5.96 | 5.05 | 12.11 | 13.70 | 13.94 |
| ROE (%) | 28.43 | 20.95 | 26.30 | 13.30 | 17.05 | 12.85 | 28.67 | 28.96 | 24.69 |
| ROA (%) | 16.68 | 11.61 | 16.21 | 6.51 | 8.22 | 6.59 | 20.22 | 20.01 | 18.14 |
| Debt & Safety ratios | |||||||||
| Current Ratio | 1.66 | 1.62 | 1.59 | 1.56 | 1.55 | 1.64 | 1.54 | 1.53 | 1.74 |
| Valuation multiples | |||||||||
| PER (Price to earnings) | 15.08 | 6.79 | 12.19 | 17.39 | 9.00 | 11.31 | 13.44 | 15.02 | 12.45 |
In: Finance
|
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2016 ($ in 000s): |
| Net sales | $ | 34,000 | Cost of goods sold | $ | 18,500 |
| Interest income | 360 | Selling and administrative expenses | 4,100 | ||
| Interest expense | 670 | Restructuring costs | 2,400 | ||
|
In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $3.2 million and a gain on disposal of the component’s assets of $5.2 million. 600,000 shares of common stock were outstanding throughout 2016. Income tax expense has not yet been recorded. The income tax rate is 40% on all items of income (loss). |
| Required: |
|
Prepare a multiple-step income statement for 2016, including EPS disclosures. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands except earnings per share. Round EPS answers to 2 decimal places.) |
In: Accounting
The following data relates to a patent owned by Sophia Cosmetology Group: Cost $2,400,000 Carrying amount 1,700,000 Expected future net cash flow 1,500,000 Fair value 1,400,000)
(a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2016.
(b) Using the same assumption as part (a) above, prepare the journal entry to record amortization expense for 2017 assuming the asset has a remaining useful life of 3 years at the beginning of 2017.
(c) Using the same assumption as part (a) above, prepare the journal entry (if any) at December 31, 2017, assuming the fair value of the asset has increased to $1,900,000.
(d) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2016, assuming Sophia ceased using the patent at the end of 2016 and intends to dispose of the patent in the coming year. Sophia expects to incur a $10,000 cost of disposal.
In: Accounting
C 18-6
Interperiod Tax Allocation
LO 18.2 AICPA Adapted Chris Green, CPA, is auditing Rayne Co.'s 2016 financial statements. For the year ended December 31, 2016, Rayne is applying GAAP for income taxes. Rayne's controller, Dunn, has prepared a schedule of all differences between financial statement and income tax return income. Dunn believes that as a result of pending legislation, the enacted tax rate at December 31, 2016, will be increased for 2017. Dunn is uncertain which differences to include and which rates to apply in computing deferred taxes. Dunn has requested an overview of GAAP from Green.
Required:
Prepare a brief memo to Dunn from Green that identifies the objectives of accounting for income taxes, defines temporary differences, explains how to measure deferred tax assets and liabilities, and explains how to measure deferred income tax expense or benefit.
In: Accounting
Minta Corporation is a leading manufacturer of sports apparel,
shoes, and equipment. The company’s 2017 financial statements
contain the following information ($ in millions):
| 2017 | 2016 | ||||
| Balance sheets: | |||||
| Accounts receivable, net | $ | 4,667 | $ | 4,231 | |
| Income statements: | |||||
| Sales revenue | $ | 37,140 | $ | 35,166 | |
A note disclosed that the allowance for uncollectible accounts had
a balance of $37 million and $61 million at the end of 2017 and
2016, respectively. Bad debt expense for 2017 was $58 million.
Assume that all sales are made on a credit basis.
Required:
1. What is the amount of gross (total) accounts
receivable due from customers at the end of 2017 and 2016?
2. What is the amount of bad debt write-offs
during 2017?
3. Analyze changes in the gross accounts
receivable account to calculate the amount of cash received from
customers during 2017.
4. Analyze changes in net accounts receivable to
calculate the amount of cash received from customers during
2017.
In: Accounting
Please full the table in (b) The following information pertaining Juniper Corporation is available for the year ended 2015,its first year of operations: :
Pretax financial income, $200,000.
Excess of tax deprecation over book depreciation equals $36,000 in 2015 (future taxable). This temporary difference (i.e., $36,000 depreciation expense) will be reversed as follows: $23,000 in 2016 and $13,000 in 2017.
The tax rates of 2015, 2016 and 2017 are 30%, 25%, and 25%, respectively.
Instructions:
Compute Juniper’s 2015 taxable income.
Pretax accounting income $ 200,000
Less: additional accelerated
depr. deducted for I/T ($36,000)
Taxable Income – 2015 $ 164,000
Prepare a schedule to show the derivation of the deferred tax liability at the end of 2015.
| 2015 | 2016 | 2017 | |
|
Future taxable amounts |
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Tax Rate |
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Deferred Tax Liability |
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Beg. Bal. of deferred tax lia. |
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Ending bal. of deferred tax lia |
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Changes in deferred tax lia |
In: Accounting
Minta Corporation is a leading manufacturer of sports apparel,
shoes, and equipment. The company’s 2017 financial statements
contain the following information ($ in millions):
| 2017 | 2016 | ||||
| Balance sheets: | |||||
| Accounts receivable, net | $ | 4,282 | $ | 3,846 | |
| Income statements: | |||||
| Sales revenue | $ | 36,055 | $ | 34,081 | |
A note disclosed that the allowance for uncollectible accounts had
a balance of $30 million and $54 million at the end of 2017 and
2016, respectively. Bad debt expense for 2017 was $51 million.
Assume that all sales are made on a credit basis.
Required:
1. What is the amount of gross (total) accounts
receivable due from customers at the end of 2017 and 2016?
2. What is the amount of bad debt write-offs
during 2017?
3. Analyze changes in the gross accounts
receivable account to calculate the amount of cash received from
customers during 2017.
4. Analyze changes in net accounts receivable to
calculate the amount of cash received from customers during
2017.
In: Accounting
Depreciation and Rate of Return
Burrell Company purchased a machine for $19000 on January 2, 2016. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $9500 each year. The tax rate is 35%.
Required:
Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset.
Straight-line method. Do not round intermediate calculations. Round final answer to two decimal places.
2016: ____%
2017: ____%
2018: ____%
2019: ____%
2020: ____%
Double-declining-balance depreciation method. Do not round intermediate calculations. Round final answer to two decimal places.
2016: ____%
2017: ____%
2018: ____%
2019: ____%
2020: ____%
***Please show all work and calculations****
In: Accounting
On December 1, 2016, Lynch Incorporated sold $17,000 of merchandise with terms 2/10, n/EOM. On December 11, 2016, collections were made on sales originally billed for $10,000, and on December 31, 2016, additional collections on sales originally billed for $6,000 were received.
| Required: | |
| 1. | Prepare the journal entries to record the sale, collections, and any required year-end adjustments assuming that Lynch records accounts receivable and sales at (a) the gross price and (b) the net price. |
| 2. | Next Level Assume that Lynch’s customer does not have the available cash to pay Lynch within the discount period. How much interest should the customer be willing to pay for a loan to permit them to take advantage of the discount period (assume no additional costs to the loan)? |
| 3. | Next Level Explain why Lynch’s granting of cash (sales) discounts may improve cash flow. |
In: Accounting
| 2015 | 2016 | |
|---|---|---|
| Sales Revenue | $920,000 | $840,000 |
| Cost of Goods Sold | 575,000 | 545,000 |
| Interest Expense | 20,000 | 20,000 |
| Income Tax Expense | 27,000 | 30,000 |
| Net Income | 61,000 | 52,000 |
| Cash Flow from Operations | 65,000 | 55,000 |
| Capital Expenditures | 65,000 | 55,000 |
| Acc Receivable (net) 31 Dec | 126,000 | 120,000 |
| Inventory 31 Dec | 196,000 | 160,000 |
| Stockholders' Equity 31 Dec | 450,000 | 400,000 |
| Total Assets 31 Dec | 750,000 | 675,000 |
Required: Calculate the following ratios for 2016. The 2015 results are given for comparative purposes. Round answers to one (1) decimal place. Use 365 days in a year.
| Question | 2015 | 2016 |
|---|---|---|
| Accounts Receivable Turnover | 8.0 | Answer |
| Average Collection Period | 45.6 days | Answer (days) |
| Inventory Turnover | 3.61 | Answer |
| Times-interest-earned Ratio | 4.80 | Answer |
| Operating-cash-flow-to-capital-expenditures Ratio | 1.22 | Answer |
In: Accounting