Title: Problem 17-2A
QA_Ori:
Part 1
HAROUN COMPANY
Income Statement Trends
For Years Ended December 31, 2014-2008
2014 2013 2012 2011 2010 2009 2008
Sales………………………………..
182.5% 161.2% 147.6% 136.2% 127.8% 119.6% 100.0%
HAROUN COMPANY
Balance Sheet Trends
December 31, 2014-2008
2014 2013 2012 2011 2010 2009 2008
Cash…………………………………65.2% 87.6% 92.1% 94.4% 98.9% 96.6% 100.0%
Accounts recble., net…………..226.9 238.0 215.7 166.7 147.2 139.8 100.0
Part 2
Analysis and Interpretation
The statements and the trend percent data indicate that the company
Sales grew steadily for the entire period of 2008 to 2014. However, beginning
At the same time that net income was declining, assets were increasing. This
The short-term liquidity of the company continued to decline. Accounts
Title: Problem 17-3A
QA_Ori:
Transaction Current
Assets
Quick
Assets
Current
Liabilities
Current
Ratio
Acid-Test
Ratio
Working
Capital
Beginning* $700,000 $308,000 $280,000 2.50 1.10 $420,000
May 2 + 50,000 _______ + 50,000 ____ ____ _______
*Beginning balances
Current assets (given)………………………………………….$700,000
Title: Problem 17-4A
QA_Ori:
1. Current ratio
2. Acid-test ratio
3. Days’ sales uncollected
4. Inventory turnover
5. Days’ sales in inventory
6. Debt-to-equity ratio
7. Times interest earned
8. Profit margin ratio
9. Total asset turnover
$10,000 + 8,400 + $29,200 + $4,500 + $32,150 + $2,650
$10,000 + $8,400 + $29,200 + $4,500
$17,500 + $3,200 + $3,300
$29,200 + $4,500
$448,600
$297,250
($48,900 + $32,150)/2
$32,150
$297,250
$29,052
$448,600
$448,600
10. Return on total assets
f. Days’ sales uncollected
f. Dividend yield
= 5.1% = 5.1%
Investment analysis: Kyan’s profit margin ratio, total asset turnover, return on total
Title: Problem 17-6AA
QA_Ori:
Part 1
Effect of income taxes (debits or losses in parentheses)
Pretax
30% Tax
Effect After-Tax
i. Loss from operating a discontinued segment……………….(18,250) (5,475) (12,775)
Part 2 Income from continuing operations (and its components)
k. Net sales…………………………………………………………. $ 998,500
a. Interest revenue……………………………………………….. 14,000
g. Gain from settling lawsuit………………………………….. 44,000
Total revenues and gains…………………………………… 1,056,500
q. Cost of goods sold…………………………………………….$482,500
b. Depreciation expense—Equipment…………………….. 34,000
$3.80
$75
$3.80
$75
l. Depreciation expense—Buildings……………………….. 52,000
e. Other operating expenses…………………………………. 106,400
Part 3 Income from discontinued segment
i. Loss from operating a discontinued
segment (after-tax)…………………………………………………………………………..$ (12,775)
Part 4 Income before extraordinary items
Part 5 Net income
Income before extraordinary items………………………………………………………..$243,425
Title: Problem 17-1B
QA_Ori:
Part 1
Part 2
BLUEGRASS CORPORATION
Common-Size Comparative Income Statements
For Years Ended December 31, 2014, 2013, and 2012
2014 2013 2012
Sales……………………………………………………100.00% 100.00% 100.00%
Cost of goods sold………………………………… 54.77 51.91 46.04
Gross profit…………………………………………… 45.23 48.09 53.96
* Some totals do not reconcile due to rounding.
Part 3
BLUEGRASS CORPORATION
Balance Sheet Data in Trend Percents
December 31, 2014, 2013, and 2012
2014 2013 2012
Assets
Current assets……………………………………….151.13% 89.97% 100.00%
Part 4
Significant relations revealed
Bluegrass’s cost of goods sold took a larger percent of sales each year. Selling
The large expansion of plant assets in 2013 was financed by a reduction in
current assets, an increase in current liabilities, a large reduction in long-term