2014 2013 Amount Percentage*
Property, plant, and
Total liabilities and
P1. Horizontal and Vertical Analysis (Continued)
Obras Corporation
Comparative Balance Sheets
December 31, 2014 and 2013
Increase or Decrease
*Rounded
**Not divisible
Assets
16-21
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2.
2014* 2013*
2014* 2013*
*
Assets
Common-Size Balance Sheets
December 31, 2014 and 2013
P1. Horizontal and Vertical Analysis (Continued)
Obras Corporation
Common-Size Income Statements
Obras Corporation
Rounded. In common-size statements, the addition and subtraction of percentages are
For the Years Ended December 31, 2014 and 2013
sometimes inexact due to rounding.
16-22
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
3.
16.3 and 12.2 percent, respectively, of the same figure.
There were significant amount, percentage, and component changes in the liability
portion of the balance sheets. In a major refinancing, Obras Corporation increased
ties and stockholders’ equity, while accounts payable and notes payable dropped to
The major changes in the income statements of Obras Corporation occurred in the ex-
about $400,000 in total. As a result, long-term debt rose to 24.4 percent of total liabili-
P1. Horizontal and Vertical Analysis (Concluded)
was little change in the component percentages.
bonds payable by $400,000 and decreased accounts payable and notes payable by
16-23
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Ratio Increase Decrease None
a. Issued common stock
d. Borrowed cash by issuing
f. Purchased merchandise
h. Sold merchandise on
i. Paid current portion of
k. Purchased marketable
l. Declared 5% stock
Effect
P2. Effects of Transactions on Ratios
Transaction
16-24
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
time0.6=
23.4==
U
P3. Comprehensive Ratio Analysis
1.
Neutral
6. Favorable (F) or
Unfavorable (U)
Change
Neutral
times=
Udays26.3
( + ) / 2 ( + ) / 2
( + ) / 2 ( + ) / 2
F
Inventory
turnover*
F
93.6
Days’ payable* =
U
Payables
turnover*
Days’ inventory
on hand*
=
P3. Comprehensive Ratio Analysis (Continued)
6. Favorable (F) or
Unfavorable (U)
Change
Neutral
=
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
P3. Comprehensive Ratio Analysis (Continued)
b.
c.
a. Profit margin* $800,400
Profitability and total
asset management
analysis
*Rounded
2.
(+ ) /2(+ ) /2
U
P3. Comprehensive Ratio Analysis (Continued)
Debt to equity
ratio*
Ratio 2013
U
U
c.
Financial risk analysis
3.
a.
Interest coverage
ratio*
b. Return on equity*
time
$110,000
*Rounded
6. Favorable (F) or
Unfavorable (U)
Change
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Cash flows to
assets*
=
U
U
Cash flows to
sales*
F
6. Favorable (F) or
Unfavorable (U)
Change
$38,000
4.
yield* =
P3. Comprehensive Ratio Analysis (Continued)
Ratio 2014
U
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
//
$80.00 = 32.5
P3. Comprehensive Ratio Analysis (Concluded)
=
b.
Price/earnings
(P/E) ratio*
a.
Dividend
yield*
Market strength
analysis
6. Favorable (F) or
Unfavorable (U)
Change
5.
F
$80.00 =
$1.05 1.0%==
*Rounded
F
2013
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.