Chapter 12 – Financial Statement Analysyis
12–21
Case 12-22, continued
2013
2012
2011
Assets
Cash
3.6%
3.1%
2.9%
Accounts receivable, net
14.1%
15.5%
13.2%
Inventory
6.7%
9.9%
7.8%
Prepaid expenses
1.2%
1.2%
0.6%
Total current assets
25.6%
29.7%
24.5%
Property & equipment (net)
74.4%
70.3%
75.5%
Total assets
100.0%
100.0%
100.0%
Liabilities & Stockholders’ Equity
Accounts payable
5.9%
9.9%
11.0%
Accrued expenses
1.2%
1.5%
5.8%
Total current liabilities
7.1%
11.4%
16.8%
Long-term debt
18.9%
19.5%
21.0%
Total liabilities
26.0%
30.9%
37.8%
Stockholders’ equity:
Common stock
0.7%
0.7%
0.7%
Additional paid-in capital
11.0%
12.1%
8.7%
Retained earnings
62.3%
56.3%
52.8%
Total stockholders’ equity
74.0%
69.1%
62.2%
Total liabilities & stockholders’
equity
100.0%
100.0%
100.0%
2012:
2013:
Case 12-22, continued
c. Working capital
2011:
$175,400 – $120,800 = $54,600
2012:
$243,500 – $93,440 = $150,060
2013:
$229,860 – $64,120 = $165,740
Current ratio
2011:
$175,400
$120,800
= 1.45
2012:
$243,500
$93,440
= 2.61
2013:
$229,860
$64,120
= 3.58
Chapter 12 – Financial Statement Analysyis
Case 12-22, continued
12–24
Case 12-22, continued
d. Debt ratio
2011:
$270,800
$715,700
= 38%
2012:
$253,440
$819,500
= 31%
2013:
$234,120
$898,760
= 26%
Debt-to-equity ratio
2011:
$270,800
$444,900
= 0.61
2012:
$253,440
$566,060
= 0.45
2013:
$234,120
$664,640
= 0.35
Times-interest-earned ratio
2011:
$145,800 + $23,900
$11,900
= 14.3
2012:
$159,200 + $15,900
$10,500
= 16.7
2013:
$179,400 + $22,500
$11,200
= 18.0
by the times-interest-earned ratio.
Chapter 12 – Financial Statement Analysyis
12–25
Case 12-22, continued
e. Gross Margin
2011:
$249,900
$484,200
= 51.6%
2012:
$263,800
$523,000
= 50.4%
2013:
$285,600
$576,600
= 49.5%
Return on assets
2012:
$98,760 + ($10,500 × (1 – 0.40))
($715,700 + $819,500) ÷ 2
= 13.7%
2013:
$114,420 + ($11,200 × (1 – 0.40))
($819,500 + $898,760) ÷ 2
= 14.1%
Return on common stockholders’ equity
2012:
$98,760
($444,900 + $566,060) ÷ 2
= 19.5%
2013:
$114,420
($566,060 + $664,640) ÷ 2
= 18.6%
f. Pippin’s financial leverage is positive. The return on common
12–26
Case 12-22, continued
g. Earnings per share
2011:
$94,680
$5,000 ÷ $0.50 par value
= $9.47
2012:
$98,760
$6,000 ÷ $0.50 par value
= $8.23
2013:
$114,420
$6,000 ÷ $0.50 par value
= $9.54
Price/earnings ratio
2011:
$30
$9.47
= 3.2
2012:
$35
$8.23
= 4.3
2013:
$38
$9.54
= 4.0
Dividend payout ratio
2011:
$1.25
$9.47
= 13.2%
2012:
$1.30
$8.23
= 15.8%
2013:
$1.32
$9.54
= 13.8%
Chapter 12 – Financial Statement Analysyis
12–27
Case 12-23
a.
2013
2012
2011
2010a
Sales growth
20.2%
10.4%
18.5%
7.8%
EPS growth
3.3%
15.4%
30.0%
23.3%
aFor 2010: Sales growth = ($43,377 – $40,238)
$40,238 , EPS growth = $1.80 – $1.46
$1.46
in earnings per share.
b.
2013
2012
2011
2010a
Return on assets
9.6%
12.7%
13.7%
13.2%
aFor 2010, (($5,186 +($561 ×(1− .318))
($43,706 +$40,776)/2
2010 to 2011, but has started to decrease.
c.
2013
2012
2011
2010
2009
Dividend payout ratio
0.41
0.38
0.40
0.46
0.52
Solutions for Davis & Davis, Managerial Accounting, 2nd ed.
12–28
Case 12-24
a.
2013
2012
$ change
% change
Sales revenue
$5,179,016
$5,102,786
$76,230
1.5%
Cost of goods sold
2,806,148
2,692,061
114,087
4.2%
Gross profit
2,372,868
2,410,725
(37,857)
(1.6%)
Operating expenses
1,708,339
1,679,908
28,431
1.7%
Operating income
664,529
730,817
(66,288)
(9.1%)
Interest expense, net
42,279
58,081
(15,802)
(27.2%)
Other non-operating
(income), net
(29,799)
(23,518)
(6,281)
26.7%
Income before taxes
652,049
696,254
(44,205)
(6.3%)
Income tax expense
235,030
123,531
111,499
90.3%
Net income
$417,019
$572,723
$(155,704)
(27.2%)