113. Kids R Kids Company
Selected data from the comparative financial statements are provided below:
Kids R Kids Company
Balance Sheet Accounts
(all accounts have normal balances)
(in thousands)
December 31,
2013
2012
Accounts payable and Accrued expenses
$ 3,141
$ 3,249
Accrued income taxes
1,037
1,056
Accumulated depreciation
2,016
2,028
Buildings
1,507
1,535
Cash and cash equivalents
1,648
1,737
Common stock
865
861
Containers
124
157
Current maturities of long-term debt
3
397
Deferred income taxes (long-term liability)
424
426
Goodwill and other intangible assets
547
668
Inventories
890
959
Land
19
183
Loans payable (short-term)
4,459
2,677
Long-term investments
8,549
6,501
Machinery & equipment
3,855
3,896
Marketable securities
159
106
Other long-term liabilities
991
1,001
Other fixed assets
21,952
20,919
Retained earnings
7,608
6,773
Trade accounts receivable
1,666
1,639
Kids R Kids Company
Income Statement
Selected amounts
(in thousands)
Year ended December
31,
2013
2012
Net sales
$18,813
$18,868
Interest expense (all paid with cash)
277
258
Income before income taxes
5,198
6,055
Income taxes
1,665
1,926
Net income
3,533
4,129
Kids R Kids Company
Statement of Cash Flows
Selected amounts
(in thousands)
Year ended December 31,
2013
2012
Net cash provided by operating
activities
$ 3,433
$ 4,033
Financing activities:
Cash dividends paid
(1,480)
(1,387)
Purchase of treasury stock
(1,563)
(1,262)
Issuance of debt
1,818
155
Repayment of long-term debt
(410)
(751)
Issuances of stock
302
150
Refer to Kids R Kids Company. The total long-term liabilities at December 31, 2013, are (in thousands):
114. Kids R Kids Company
Selected data from the comparative financial statements are provided below:
Kids R Kids Company
Balance Sheet Accounts
(all accounts have normal balances)
(in thousands)
December 31,
2013
2012
Accounts payable and Accrued expenses
$ 3,141
$ 3,249
Accrued income taxes
1,037
1,056
Accumulated depreciation
2,016
2,028
Buildings
1,507
1,535
Cash and cash equivalents
1,648
1,737
Common stock
865
861
Containers
124
157
Current maturities of long-term debt
3
397
Deferred income taxes (long-term liability)
424
426
Goodwill and other intangible assets
547
668
Inventories
890
959
Land
19
183
Loans payable (short-term)
4,459
2,677
Long-term investments
8,549
6,501
Machinery & equipment
3,855
3,896
Marketable securities
159
106
Other long-term liabilities
991
1,001
Other fixed assets
21,952
20,919
Retained earnings
7,608
6,773
Trade accounts receivable
1,666
1,639
Kids R Kids Company
Income Statement
Selected amounts
(in thousands)
Year ended December
31,
2013
2012
Net sales
$18,813
$18,868
Interest expense (all paid with cash)
277
258
Income before income taxes
5,198
6,055
Income taxes
1,665
1,926
Net income
3,533
4,129
Kids R Kids Company
Statement of Cash Flows
Selected amounts
(in thousands)
Year ended December 31,
2013
2012
Net cash provided by operating activities
$ 3,433
$ 4,033
Financing activities:
Cash dividends paid
(1,480)
(1,387)
Purchase of treasury stock
(1,563)
(1,262)
Issuance of debt
1,818
155
Repayment of long-term debt
(410)
(751)
Issuances of stock
302
150
Refer to Kids R Kids Company.
A)
The total liabilities at December 31, 2013, are (in thousands):
B)
The debt-to-equity ratio at December 31, 2013, is:
A)
$10,055
B)
1.19 to 1, or 1.2 to 1 (Rounded)
Total liabilities = $10,055 (from Part A)
Total stockholders’ equity = $8,473
($865 Common stock + $7,608 Retained earnings) = $8,473
$10,055 (Total liabilities) / $8,473 (Total Stockholders’ equity) = 1.19 to 1
115. Kids R Kids Company
Selected data from the comparative financial statements are provided below:
Kids R Kids Company
Balance Sheet Accounts
(all accounts have normal balances)
(in thousands)
December 31,
2013
2012
Accounts payable and Accrued expenses
$ 3,141
$ 3,249
Accrued income taxes
1,037
1,056
Accumulated depreciation
2,016
2,028
Buildings
1,507
1,535
Cash and cash equivalents
1,648
1,737
Common stock
865
861
Containers
124
157
Current maturities of long-term debt
3
397
Deferred income taxes (long-term liability)
424
426
Goodwill and other intangible assets
547
668
Inventories
890
959
Land
19
183
Loans payable (short-term)
4,459
2,677
Long-term investments
8,549
6,501
Machinery & equipment
3,855
3,896
Marketable securities
159
106
Other long-term liabilities
991
1,001
Other fixed assets
21,952
20,919
Retained earnings
7,608
6,773
Trade accounts receivable
1,666
1,639
Kids R Kids Company
Income Statement
Selected amounts
(in thousands)
Year ended December
31,
2013
2012
Net sales
$18,813
$18,868
Interest expense (all paid with cash)
277
258
Income before income taxes
5,198
6,055
Income taxes
1,665
1,926
Net income
3,533
4,129
Kids R Kids Company
Statement of Cash Flows
Selected amounts
(in thousands)
Year ended December 31,
2013
2012
Net cash provided by operating
activities
$ 3,433
$ 4,033
Financing activities:
Cash dividends paid
(1,480)
(1,387)
Purchase of treasury stock
(1,563)
(1,262)
Issuance of debt
1,818
155
Repayment of long-term debt
(410)
(751)
Issuances of stock
302
150
Refer to Kids R Kids Company. The interest coverage (accrual basis) ratio at December 31, 2013, is:
116. Kids R Kids Company
Selected data from the comparative financial statements are provided below:
Kids R Kids Company
Balance Sheet Accounts
(all accounts have normal balances)
(in thousands)
December 31,
2013
2012
Accounts payable and Accrued expenses
$ 3,141
$ 3,249
Accrued income taxes
1,037
1,056
Accumulated depreciation
2,016
2,028
Buildings
1,507
1,535
Cash and cash equivalents
1,648
1,737
Common stock
865
861
Containers
124
157
Current maturities of long-term debt
3
397
Deferred income taxes (long-term liability)
424
426
Goodwill and other intangible assets
547
668
Inventories
890
959
Land
19
183
Loans payable (short-term)
4,459
2,677
Long-term investments
8,549
6,501
Machinery & equipment
3,855
3,896
Marketable securities
159
106
Other long-term liabilities
991
1,001
Other fixed assets
21,952
20,919
Retained earnings
7,608
6,773
Trade accounts receivable
1,666
1,639
Kids R Kids Company
Income Statement
Selected amounts
(in thousands)
Year ended December
31,
2013
2012
Net sales
$18,813
$18,868
Interest expense (all paid with cash)
277
258
Income before income taxes
5,198
6,055
Income taxes
1,665
1,926
Net income
3,533
4,129
Kids R Kids Company
Statement of Cash Flows
Selected amounts
(in thousands)
Year ended December 31,
2013
2012
Net cash provided by operating activities
$ 3,433
$ 4,033
Financing activities:
Cash dividends paid
(1,480)
(1,387)
Purchase of treasury stock
(1,563)
(1,262)
Issuance of debt
1,818
155
Repayment of long-term debt
(410)
(751)
Issuances of stock
302
150
Refer to Kids R Kids Company. The Interest coverage (cash basis) ratio at December 31, 2013, is:
117. King Cotton Company
The liabilities section of the company’s most recent consolidated balance sheets is provided below:
King Cotton Company
Consolidated Balance Sheets
(in millions)
December 31,
2013
2012
Current liabilities
Short-term borrowings
$ 250
$ 200
Accounts payable and other current liabilities
4,500
4,450
Income taxes payable
200
50
Total current liabilities
$4,950
$4,700
Long-term debt
2,700
3,000
Other long-term liabilities
3,800
3,950
Deferred income taxes
1,500
1,400
Refer to King Cotton Company. What are the total long-term liabilities for each of the two years presented?
2013:
$8,000 (in millions)
$2,700 (Long-term debt) + $3,800 (Other long-term debt) + $1,500 (Deferred income taxes) = $8,000
2012:
$8,350 (in millions)
$3,000 (Long-term debt) + $3,950 (Other long-term debt) + $1,400 (Deferred income taxes) = $8,350
118. King Cotton Company
The liabilities section of the company’s most recent consolidated balance sheets is provided below:
King Cotton Company
Consolidated Balance Sheets
(in millions)
December 31,
2013
2012
Current liabilities
Short-term borrowings
$ 250
$ 200
Accounts payable and other current liabilities
4,500
4,450
Income taxes payable
200
50
Total current liabilities
$4,950
$4,700
Long-term debt
2,700
3,000
Other long-term liabilities
3,800
3,950
Deferred income taxes
1,500
1,400
Refer to King Cotton Company. What is the percent increase/decrease of long-term liabilities from 2012 to 2013? Which liability appears to have
caused the greatest change?
A decrease of 4.19 or 4.2% (Rounded)
2012 Long-term liabilities:
$8,350
2013 Long-term liabilities:
$8,000
[($8,000 – $8,350) / $8,350] ´ 100 = -4.19 or -4.2%. (Rounded)
119. King Cotton Company
The liabilities section of the company’s most recent consolidated balance sheets is provided below:
King Cotton Company
Consolidated Balance Sheets
(in millions)
December 31,
2013
2012
Current liabilities
Short-term borrowings
$ 250
$ 200
Accounts payable and other current liabilities
4,500
4,450
Income taxes payable
200
50
Total current liabilities
$4,950
$4,700
Long-term debt
2,700
3,000
Other long-term liabilities
3,800
3,950
Deferred income taxes
1,500
1,400
Refer to King Cotton Company. Which long-term liability would also be listed in the short-term liability section? Why?
120. King Cotton Company
The liabilities section of the company’s most recent consolidated balance sheets is provided below:
King Cotton Company
Consolidated Balance Sheets
(in millions)
December 31,
2013
2012
Current liabilities
Short-term borrowings
$ 250
$ 200
Accounts payable and other current liabilities
4,500
4,450
Income taxes payable
200
50
Total current liabilities
$4,950
$4,700
Long-term debt
2,700
3,000
Other long-term liabilities
3,800
3,950
Deferred income taxes
1,500
1,400
Refer to King Cotton Company. What percent of the total liabilities for 2013 and 2012 are long-term liabilities? What implication does this have?
121. King Cotton Company
The liabilities section of the company’s most recent consolidated balance sheets is provided below:
King Cotton Company
Consolidated Balance Sheets
(in millions)
December 31,
2013
2012
Current liabilities
Short-term borrowings
$ 250
$ 200
Accounts payable and other current liabilities
4,500
4,450
Income taxes payable
200
50
Total current liabilities
$4,950
$4,700
Long-term debt
2,700
3,000
Other long-term liabilities
3,800
3,950
Deferred income taxes
1,500
1,400
Refer to King Cotton Company. Which one of the liabilities shown in the balance sheets is used in the calculation of the debt–to-equity ratio? If we
can assume that the stockholders’ equity total remained relatively constant for the two years, how would the ratio change (increase/decrease) from
2012 to 2013? What would this say about the company’s financial position?