Name Date Class
17-R RECYCLING PROBLEM (LO1, 2, 3, 4, 5, 6, 7, 8)
Analyzing financial statements
1.
Current Year Prior Year
Amount Percent Amount Percent
Net Sales 755 0 4 7 04 731 5 6 4 62
Cost of Merchandise Sold 352 3 4 2 54 342 1 6 4 67
Gross Prot 402 7 0 4 50 389 3 9 9 95
Operating Expenses:
Income from Operations 35 0 9 0 58 27 6 2 9 97
Other Revenue 5 7 7 80 3 9 4 31
Net Income before Federal Income Tax 35 6 6 8 38 28 0 2 4 28
Less Federal Income Tax Expense 5 3 5 0 26 4 2 0 3 64
Net Income after Federal Income Tax 30 3 1 8 12 23 8 2 0 64
International Spices
Comparative Income Statement
For Years Ended December 31, 20– and 20–
100.0 100.0
46.7 46.8
53.3 53.2
4.6 3.8
0.1 0.1
4.7 3.8
0.7 0.6
4.0 3.3
*
68 • Recycling Problem Working Papers
17-R RECYCLING PROBLEM (continued)
Current Year Prior Year
Amount Percent Amount Percent
ASSETS
Current Assets:
Cash 24 5 1 5 36 7 2 2 6 61
Plant Assets:
Ofce Equipment (net) 36 6 9 0 14 34 3 7 5 97
Store Equipment (net) 34 6 6 6 02 36 8 2 3 35
Total Plant Assets 71 3 5 6 16 71 1 9 9 32
Total Assets 208 9 6 1 01 185 8 5 3 97
LIABILITIES
Current Liabilities:
Accounts Payable 22 7 7 0 19 23 8 4 2 00
Dividends Payable 1 8 0 0 00 1 6 2 0 00
Other Current Liabilities 8 5 3 3 58 9 8 5 2 85
International Spices
Comparative Balance Sheet
December 31, 20– and 20–
TE
11.7 3.9
17.6 18.5
16.6 19.8
34.1 38.3
100.0 100.0
10.9 12.8
0.9 0.9
4.1 5.3
Chapter 17 Financial Statement Analysis • 69
Name Date Class
17-R RECYCLING PROBLEM (continued)
2.
Current
Year
Prior
Year
Increase (Decrease)
Amount Percent
Net Sales 755 0 4 7 04 731 5 6 4 62
Cost of Merchandise Sold 352 3 4 2 54 342 1 6 4 67
Gross Prot 402 7 0 4 50 389 3 9 9 95
Total Operating Expenses 367 6 1 3 92 361 7 6 9 98
Income from Operations 35 0 9 0 58 27 6 2 9 97
Other Revenue 5 7 7 80 3 9 4 31
International Spices
Comparative Income Statement
For Years Ended December 31, 20– and 20–
23 4 8 2 42 3.2
10 1 7 7 87 3.0
13 3 0 4 55 3.4
5 8 4 3 94 1.6
7 4 6 0 61 27.0
1 8 3 49 46.5
17-R RECYCLING PROBLEM (continued)
Current
Year
Prior
Year
Increase (Decrease)
Amount Percent
ASSETS
Current Assets:
Cash 24 5 1 5 36 7 2 2 6 61
Total Assets 208 9 6 1 01 185 8 5 3 97
LIABILITIES
Current Liabilities:
Accounts Payable 22 7 7 0 19 23 8 4 2 00
Dividends Payable 1 8 0 0 00 1 6 2 0 00
Other Current Liabilities 8 5 3 3 58 9 8 5 2 85
Total Liabilities 33 1 0 3 77 35 3 1 4 85
STOCKHOLDERS’ EQUITY
International Spices
Comparative Balance Sheet
December 31, 20– and 20–
17 2 8 8 75 239.2
23 1 0 7 04 12.4
(1 0 7 1 81) (4.5)
1 8 0 00 11.1
(1 3 1 9 27) (13.4)
(2 2 1 1 08) (6.3)
Chapter 17 Financial Statement Analysis • 71
Name Date Class
17-R RECYCLING PROBLEM (continued)
3.
4.
Current
Year Prior
Year
Increase over
Prior Year
(Yes or No) Evaluation
Earnings per share $2.38
Ratio Target Range Actual Ratio Favorable
Trend
Favorable
Result
Low High Current Year Prior Year
Gross margin 53.0% 55.0%
Total operating expenses 46.0% 48.0%
Operating margin 5.0% 9.0%
53.3% 53.2% Yes Yes
48.7% 49.5% Yes No
4.6% 3.8% Yes No
$3.03 Yes EPS increased significantly over
the prior year, a favorable trend.
72 • Recycling Problem Working Papers
Target Range
Actual Ratio Favorable Result
Low High
Working capital $100,000.00 $125,000.00
5.
TE
Supporting calculations:
Net income after federal income taxes $30,318.12
Number of shares outstanding ÷ 10,000
Earnings per share $ 3.03
Current assets $137,604.85
Current liabilities − $ 33,103.77
Working capital $104,501.08
$104,501.08 Yes