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Title: Problem 17-2B
QA_Ori:
Part 1
TRIPOLY COMPANY
Income Statement Trends
For Years Ended December 31, 2014-2008
2014 2013 2012 2011 2010 2009 2008
Sales...................................... 65.1% 70.9% 73.3% 79.1% 86.0% 89.5% 100.0%
TRIPOLY COMPANY
Balance Sheet Trends
December 31, 2014-2008
2014 2013 2012 2011 2010 2009 2008
Cash..................................... 64.7% 67.6% 76.5% 79.4% 88.2% 91.2% 100.0%
Accounts recble., net.............. 81.3 85.0 87.5 90.0 93.8 96.3 100.0
Merchandise inventory........... 79.8 82.7 85.6 86.5 89.4 91.3 100.0
Part 2
Analysis and Interpretation
The statements and the trend percent data show that sales declined every
Operating expenses fell less rapidly than gross profit, so the final result was
Management was not able to reduce costs and expenses fast enough to keep
It appears that the cash generated from operations was used primarily to
The company made a large expansion of its plant assets during 2012,
Title: Problem 17-3B
QA_Ori:
Transaction Current
Assets
Quick
Assets
Current
Liabilities
Current
Ratio
Acid-Test
Ratio
Working
Capital
Beginning* $300,000 $168,000 $120,000 2.50 1.40 $180,000
June 1 +120,000 +120,000
- 75,000 _______ ________ ____ ____ _______
*Beginning balances
Title: Problem 17-4B
QA_Ori:
1. Current ratio
2. Acid-test ratio
$6,100 + $6,900 + $12,100 + $3,000 + $13,500 + $2,000
$11,500 + $3,300 + $2,600
$6,100 + $6,900 + $12,100 + $3,000
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. Return on total assets
11. Return on common stockholders' equity
$12,100 + $3,000
$315,500
$236,100
($13,500 + $17,400)/2
$13,500
$236,100
$23,800
$315,500
$315,500
($117,500 + $94,900)/2
$23,800
($117,500 + $94,900)/2
$23,800
QA_Edit:
Title: Problem 17-5B
QA_Ori:
Part 1
Fargo Company Ball Company
a. Current ratio
b. Acid-test ratio
c. Accounts (and notes) receivable turnover
d. Inventory turnover
e. Days’ sales in inventory
f. Days' sales uncollected
x 365 = 82.3 days x 365 = 43.5 days
$393,600
($77,100 + $11,600 + $72,200)/2
$290,600
($86,800 + $105,100)/2
$86,800
$290,600
$77,100 + $11,600
$393,600
$205,200
$90,500
$108,700
$90,500
$208,100
$97,000
$116,000
$97,000
$480,000
($82,000 + $80,500)/2
$82,000
$480,000
$70,500 + $9,000
$667,500
$667,500
($70,500 + $9,000 + $73,300)/2
Short-term credit risk analysis: Fargo and Ball have nearly equal current ratios and
Part 2
Fargo Company Ball Company
a. Profit margin ratio
Investment analysis: Ball’s profit margin, total asset turnover, return on total assets,
Title: Problem 17-6BA
QA_Ori:
Part 1 Effect of income taxes (debits or losses in parentheses)
Pretax
25% Tax
Effect After-Tax
e. Loss on hurricane damage..................................................(64,000)
(16,000) (48,000)
(45,000) (135,000)
Part 2 Income from continuing operations (and its components)
c. Net sales.......................................................................... $2,640,000
b. Interest revenue............................................................... 20,000
j. Gain from settling lawsuit................................................. 68,000
Total revenues and gains................................................. 2,728,000
Part 3 Income from discontinued segment
l. Loss from operating a discontinued segment (after-tax)..........................
$ (90,000)
Part 4 Income before extraordinary items
Income from cont. operations after taxes (from Part 2).......................$ 783,000
Part 5 Net income
Part 5 Net income
Title: Serial Problem 1
QA_Ori:
Gross margin with services revenue
Gross margin = Total revenue – Cost of goods sold
Gross margin without services revenue
Gross margin = Net (goods) sales – Cost of goods sold
