Exercise 1;Identify each of the following as (a) an underlying concept, (b) an objective of financial statement analysis, (c) a standard for financial statement analysis, (d) a source of information for financial statement analysis, or an executive compensation issue;Past Ratios of the company;Linking performance to shareholder value;Average ratios of other companies in the same industry;Assessment of the future potential of an investment;Timeliness;Interim financial statements;SEC Form 10-K;Assessment of rick;Comparability;A company?s annual report;Exercise 7;Elm Company had total assets of $640,000 in 2012. $680,000 in 2013, and $760.000 in 2014. In 2013, Elm had net income of $77,112 on revenues of $1,224,000. In 2014, it had net income of $98,952 on revenues of $1,596,000. Compute the profit margin, asset turnover, and return on assets for 2013 and 2014. Comment on the apparent cause of the increase or decrease in profitability. (Round to one decimal place).;Exercise 12;Components of Van Corporation?s income statement for the year ended December 31, 2014 follow. Recast the income statement in multiple step form, including allocating income taxes to appropriate items (assume a 30 percent income tax rate) and showing earnings per share figures (200,000 shares outstanding). (Round earnings per share figures to the nearest cent.);Sales $1,110,000;Cost of goods sold (550,000);Operating expenses (225,000);Restructuring (110,000);Total income taxes expense for period (179,000);Income from discontinued operations 160,000;Gain on disposal of discontinued operations 140,000;Extraordinary gain 72,000;Net income $417,900;Earnings per share $ 2.09;Problem 1;Obras Corporation?s condensed comparative income statements and comparative balance sheets for 2014 and 2013 follow.;Obras Corporation;Comparative Income Statements;For the Years Ended December 31, 2014 and 2013;2014 2013;Net sales $3,276,800 $3,146,400;Cost of goods sold 2,088,800 2,008,400;Gross margin $1,188,000 $1,138,000;Operating expenses;Selling expenses $476,800 $518,000;Administrative expenses 447,200 423,200;Total operating expenses $924,000 $941,200;Income from operations $264,000 $196,800;Interest expense 65,600 39,200;Interest before income taxes $198,400 $157,600;Income taxes expense 62,400 56,800;Net income $136,000 $100,800;Earnings per share $ 3.40 $ 2.52;Obras Corporation;Comparative Balance Sheets;December 31, 2014 and 2013;2014 2013;Assets;Cash $81,200 $40,800;Accounts receivable (net) 235,600 229,200;Inventory 574,800 594,800;Property, plants and equipment (net) 750,000 720,000;Total assets $1,641,600 $1,584,800;Liabilities and Stockholders? Equity;Accounts payable $267,000 $477,200;Notes payable (short-term) 200,000 400,000;Bonds payable 400,000 ---;Common stock, $10 par value 400,000 400,000;Retained earnings 374,000 307,600;Total liabilities and stockholders? equity $ 1,641,600 $1,584,800;REQUIRED;Prepare schedules showing the amount and percentage changes from 2013 to 2014 for the comparative income statements and the balance sheets (Round to the one decimal place.);Prepare common-size income statements and balance sheets for 2013 and 2014. (Round to the one decimal place).;Comment on the results in requirements 1 and 2 by identifying favorable and unfavorable changes in the components and composition of the statements.;Problem 3;Tuxedo Corporation?s condensed comparative income statements and balance sheets follow. All figures are given in thousands of dollars, except for earnings per share.;Tuxedo Corporation;Comparative Income Statements;For the Years Ended December 31, 2014 and 2013;2014 2013;Net sales $800,400 $742,600;Cost of goods sold 454,100 396,200;Gross margin $346,300 $346,400;Operating expenses;Selling expenses $130,100 $104,600;Administrative expenses 140,300 115,500;Total operating expenses $270,400 $220,100;Income from operations $ 75,900 $126,300;Interest expense 25,000 20,000;Income before income taxes $ 50,900 $106,300;Income taxes expense 14,000 35,000;Net income $ 36,900 $ 71,300;Earnings per share $ 2.46 $ 4.76;Tuxedo Corporation;Comparative Balance Sheets;December 31, 2014 and 2013;2014 2013;Assets;Cash $ 31,100 $ 27,200;Accounts receivable (net) 72,500 42,700;Inventory 122,600 107,800;Property, plant, and equipment (net) 577,700 507,500;Total assets $803,900 $685,200;Liabilities and Stockholders? Equity;Accounts payable $104,700 $ 72,300;Notes payable (short-term) 50,000 50,000;Bonds payable 200,000 110,000;Common stock, $10 par value 300,000 300,000;Retained earnings 149,200 152,900;Total liabilities and stockholders? equity $803,900 $685,200;Additional data for Tuxedo in 2014 and 2013 follow;2014 2013;Net cash flows from operating activities $ 64,000 $ 99,000;Net capital expenditures $119,000 $ 38,000;Dividends paid $31,400 $35,000;Number of common shares 30,000 30,000;Market price per share $80 $120;Balances of selected accounts at the end of 2012 were accounts receivable (net), $52,700, inventory, $99,300, accounts payable, $64,800, total assets, $647,800, and stockholders? equity, $376,600. All of the bonds payable were long-term liabilities.;REQUIRED;Perform the following analyses. (Round to one decimal place.);Prepare an operating asset management analysis by calculating for each year the (a) current ratio, (b) quick ratio, (c) receivables turnover, (d) days? sales uncollected, (e) inventory turnover, (f) days? inventory on hand, (g) payables turnover, (h) days? payable, and (i) financing period.;Prepare a profitability and total asset management analysis by calculating for each year the (a) profit margin, (b) asset turnover, and (c) return on assets.;Prepare a financial risk analysis by calculating for each year the (a) debt to equity ratio, (b) return on equity, and (c) interest coverage ratio.;Prepare a liquidity analysis by calculating for each year the (a) cash flow yield, (b) cash flows to sales, (c) cash flows to assets, and (d) free cash flow.;Prepare an analysis of market strength by calculating for each year the (a) price/earnings (P/E) ratio and (b) dividend yield.;Accounting connection: After making the calculations, indicate whether each ratio improved or deteriorated from 2013 to 2014 (use F for favorable and U for unfavorable and consider changes of 0.1 or less to be neutral).
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