Prepare Utech Company’s income statement for 2014, beginning with Income before irregular items.

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Utech Company has income before irregular items of $345,800 for the year ended December 31, 2014. It also has the following items (before considering income taxes): (1) an extraordinary fire loss of $48,900 and (2) a gain of $29,100 from the disposal of a division. Assume all items are subject to income taxes at a 24% tax rate.

Prepare Utech Company’s income statement for 2014, beginning with Income before irregular items.

 

 

Exercise 13-5

Suppose the comparative balance sheets of Nike, Inc. are presented here.

NIKE, INC.
Condensed Balance Sheet
May 31
($ in millions)
2014
2013
Assets
Current Assets
$9,557
$8,724
Property, plant, and equipment (net)
1,827
1,765
Other assets
1,513
1,669
Total assets
$12,897
$12,158
Liabilities and Stockholders’ Equity
Current Liabilities
$3,176
$3,227
Long-term liabilities
1,250
1,279
Stockholders’ equity
8,471
7,652
Total liabilities and stockholders’ equity
$12,897
$12,158

(a) Prepare a horizontal analysis of the balance sheet data for Nike, using 2013 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 1 decimal place, e.g. 12.1%.)

NIKE, INC.
Condensed Balance Sheet
May 31
($ in millions)
2014
2013
Increase
(Decrease)
Percentage
Change
from 2013
Assets
   Current Assets
$9,557
$8,724
$[removed]
[removed]
%
   Property, plant, and equipment (net)
1,827
1,765
[removed]
[removed]
%
   Other assets
1,513
1,669
[removed]
[removed]
%
   Total assets
$12,897
$12,158
$[removed]
[removed]
%
Liabilities and Stockholders’ Equity
   Current Liabilities
$3,176
$3,227
$[removed]
[removed]
%
   Long-term liabilities
1,250
1,279
[removed]
[removed]
%
   Stockholders’ equity
8,471
7,652
[removed]
[removed]
%
   Total liabilities and stockholders’ equity
$12,897
$12,158
$[removed]
[removed]
%

(b) Prepare a vertical analysis of the balance sheet data for Nike for 2014.

NIKE, INC.
Condensed Balance Sheet
May 31, 2014
$ (in millions)
Percent
Assets
   Current Assets
$9,557
[removed]
%
   Property, plant, and equipment (net)
1,827
[removed]
%
   Other assets
1,513
[removed]
%
Total assets
$12,897
[removed]
%
Liabilities and Stockholders’ Equity
   Current Liabilities
$3,176
[removed]
%
   Long-term Liabilities
1,250
[removed]
%
   Stockholders’ equity
8,471
[removed]
%
Total liabilities and stockholders’ equity
$12,897
[removed]
%

 

 

Exercise 13-6

Here are the comparative income statements of Eudaley Corporation.

EUDALEY CORPORATION
Comparative Income Statement
For the Years Ended December 31
2014
2013
Net sales
$623,280
$526,140
Cost of goods sold
458,190
399,970
Gross Profit
165,090
126,170
Operating expenses
74,840
41,110
Net income
$ 90,250
$ 85,060

Prepare a horizontal analysis of the income statement data for Eudaley Corporation, using 2013 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 1 decimal place, e.g. 12.1%.)

EUDALEY CORPORATION
Comparative Income Statement
For the Years Ended December 31
Increase or (Decrease) During 2014
2014
2013
Amount
Percentage
Net sales
$623,280
$526,140
$[removed]
[removed]
%
Cost of goods sold
458,190
399,970
[removed]
[removed]
%
Gross Profit
165,090
126,170
[removed]
[removed]
%
Operating expenses
74,840
41,110
[removed]
[removed]
%
Net income
$ 90,250
$ 85,060
$[removed]
[removed]
%
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Prepare a vertical analysis of the income statement data for Eudaley Corporation for both years. (Round percentages to 1 decimal place, e.g. 12.1%.)

EUDALEY CORPORATION
Comparative Income Statements
For the Years Ended December 31
2014
2013
$
Percent
$
Percent
Net sales
$623,280
[removed]
%
$526,140
[removed]
%
Cost of goods sold
458,190
[removed]
%
399,970
[removed]
%
Gross Profit
165,090
[removed]
%
126,170
[removed]
%
Operating expenses
74,840
[removed]
%
41,110
[removed]
%
Net income
$ 90,250
[removed]
%
$ 85,060
[removed]
%

 

 

 

 

Exercise 13-11

Here is the income statement for Eberle, Inc.

EBERLE, INC.
Income Statement
For the Year Ended December 31, 2014
Sales revenue
$441,600
Cost of goods sold
207,300
Gross profit
234,300
Expenses (including $12,500 interest and $23,500 income taxes)
89,900
Net income
$ 144,400

Additional information:

1. Common stock outstanding January 1, 2014, was 22,400 shares, and 39,200 shares were outstanding at December 31, 2014.
2. The market price of Eberle, Inc., stock was $13 in 2014.
3. Cash dividends of $19,000 were paid, $6,800 of which were to preferred stockholders.

Compute the following measures for 2014. (Round all answers to 2 decimal places, e.g. 1.83 or 2.51%)

(a) Earnings per share
$[removed]
(b) Price-earnings ratio
[removed]
  times
(c) Payout ratio
[removed]
  %
(d) Times interest earned
[removed]
  times

 

 

 

Problem 13-5A

Suppose selected financial data of Target and Wal-Mart for 2014 are presented here (in millions).

Target
Corporation
Wal-Mart
Stores, Inc.
Income Statement Data for Year
Net sales
$65,038
$410,365
Cost of goods sold
45,990
307,684
Selling and administrative expenses
15,224
75,219
Interest expense
660
1,920
Other income (expense)
(71
)
(380
)
Income tax expense
1,308
6,733
Net income
$ 1,785
$ 18,429
Balance Sheet Data
(End of Year)
Current assets
$17,269
$45,356
Noncurrent assets
25,578
122,848
Total assets
$42,847
$168,204
Current liabilities
$10,937
$55,219
Long-term debt
18,294
43,370
Total stockholders’ equity
13,616
69,615
Total liabilities and stockholders’ equity
$42,847
$168,204
Beginning-of-Year Balances
Total assets
$44,595
$163,195
Total stockholders’ equity
13,924
65,043
Current liabilities
10,224
54,308
Total liabilities
30,671
98,152
Other Data
Average net accounts receivable
$7,454
$3,882
Average inventory
6,855
33,975
Net cash provided by operating activities
5,574
26,667
Capital expenditures
1,773
12,167
Dividends
468
4,358

(a) For each company, compute the following ratios. (Round all answers to 2 decimal places, e.g. 1.83 or 12.61%.)

Target
Wal-Mart
(1) Current ratio.
[removed]
  :1
[removed]
  :1
(2) Accounts receivable turnover.
[removed]
  times
[removed]
  times
(3) Average collection period.
[removed]
  days
[removed]
  days
(4) Inventory turnover.
[removed]
  times
[removed]
  times
(5) Days in inventory.
[removed]
  days
[removed]
  days
(6) Profit margin.
[removed]
  %
[removed]
  %
(7) Asset turnover.
[removed]
  times
[removed]
  times
(8) Return on assets.
[removed]
  %
[removed]
  %
(9) Return on common stockholders’ equity.
[removed]
  %
[removed]
  %
(10) Debt to assets ratio.
[removed]
  %
[removed]
  %
(11) Times interest earned.
[removed]
  times
[removed]
  times
(12) Current cash debt coverage.
[removed]
  times
[removed]
  times
(13) Cash debt coverage.
[removed]
  times
[removed]
  times
(14) Free cash flow.
$[removed]
$[removed]
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