The income statement for Sutherland, Inc. appears below.
Additional information:
- The weighted-average common shares outstanding in 2020 were 30,000 shares.
- The market price of Sutherland, Inc. stock was $13 in 2020.
- Cash dividends of $26,000 were paid, $5,000 of which were to preferred stockholders.
Instructions
Compute the following ratios at December 31, 2020.
- Earning per share
- Price-earnings ratio.
- Payout ratio.
- Times interest earned.
The Comparative condensed income statements of Emley Corporation are shown below.
Comparative Condensed Balance Sheets
For the Years Ended December 31
Instructions
- Prepare a horizontal analysis of the income statement data for Emley Corporation using 2019 as a base
- Prepare a vertical analysis of the income statement data for Emley Corporation in columnar form for both years
Suppose Nordstrom, Inc, which operates department stores in numerous states, has the following selected financial statement data for a recent year.
Balance Sheets (partial)
For the year, net sales were $8,258 and cost of goods sold was $5,328 (in millions).
Instructions
- Compute the four liquidity ratios at the end of the year.
- Compare Nordstrom's liquidity with (1) Mac's Inc., and (2) the industry averages for department stores as below information
Keener Incorporation had the following transactions occur involving current assets and current liabilities during February 2020.
| Feb. 3 | Accounts receivable of $15,000 are collected. |
| 7 | Equipment is purchased for $28,000 cash. |
| 11 | Paid $3,000 for a 3-year insurance policty |
| 14 | Accounts payable of $12,000 are paid |
| 18 | Cash dividends of $5,000 are declined. |
Additional information:
- as February 1, 2020, current assets were $110,000, and current liabilities were 450,000
- As of February 1, 2020, current assets included $15,000 of inventory and $2,000 of prepaid expenses.
Instructions
- Compute the current ratio as of the beginning of the month and after each transaction.
- Compute the acid-test ratio as of the beginning of the month and after each transaction.
Frizell Company has the following comparative balance sheet data.
Additional information for 2020:
- Net income was $25,000
- Sales on account were $410,000. Sales returns and allowances were $20,000
- Cost of goods sold was $198,000
Instructions
Compute the following ratios at December 31, 2020.
- Current Ratio
- Acid-test Ratio
- Accounts receivable turnover.
- Inventory turnover
Selected Comparative statements data for Queen products company are presented below. All balance sheet data as of December 31.
Instructions
Compute the following ratios for 2020.
- Profit margin
- Asset turnover.
- Return on assets.
- Return on common stockholders' equity
Wiemers Corporation's comparative balance sheets are presented below.
Wiemers's 2020 income statement included net sales of $100,000, cost of goods sold of $60,000, and net income of $15,000.
Instructions
Compute the following ratios at 2020.
- Current ratio.
- Acid-test Ratio
- Accounts Receivables turnover.
- Inventory turnover.
- Profit margin.
- Asset turnover.
- Return on assets.
- Return on common stockholders' equity.
- Debt to total assets.
Trayer Corporation has income from continuing operations of $290,000 for the year ended December 31, 2020. It also has the following items (before considering income taxes).
- An unrealized loss of $80,000 on available-for-sale securities.
- A gain of $30,000 on the discontinuance of a division (Comprising a $10,000 loss from operations and a $40,000 gain on disposal).
- A correction of an error in last year's financial statements that resulted in a $20,000 understatement of 2019 net income
Assume all items are subject to income taxes at a 20% tax rate.
Instructions
Prepare a statement of comprehensive income, beginning with income from continuing operations.
For its fiscal year ending October 31, 2020, Haas Corporation reports the following partial data shown below.
The loss on discontinued operations comprised a $50,000 loss from operations and a $70,000 loss from disposal. The income tax rate is 20% on all items.
Instructions
- Prepare a correct statement of comprehensive income beginning with income before income taxes.
- Explain in memo form why the income statement data are misleading.
The Comparative condensed balance sheets of Gurley Corporation are presented below.
Comparative Condensed Balance Sheets
December 31
Instructions
- Prepare a horizontal analysis of the balance sheet data for Gurley Corporation using 2019 as a base
- Prepare a vertical analysis of the balance sheet data for Gurley Corporation in columnar form for 2020