Chapter 13: Q4QS (page 615)
Use the following information for Tide Corporation to determine the 2016 and 2017 trend percents for net sales using 2016 as the base year.
\( thousands | 2017 | 2016 |
Net sales | \)801,810 | $453,000 |
Cost of goods sold | 392,887 | 134,088 |
Year | Percent trends |
2016 | 100% |
2017 | 177% |
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Refer to Simon Company’s financial information in Exercises 13-6 and 13-8. Additional information about the company follows. To help evaluate the company’s profitability, compute and interpret the following ratios for 2017 and 2016:
(1) return on common stockholders’ equity—percent rounded to one decimal,
(2) price-earnings ratio on December 31—rounded to one decimal, and
(3) dividend yield— percent rounded to one decimal.
Common stock market price, December 31, 2017 | $30.00 |
Common stock market price, December 31, 2016 | 28.00 |
Annual cash dividends per share in 2017 | 0.29 |
Annual cash dividends per share in 2016 | 0.24 |
Identify which of the following six metrics a through f best completes questions 1 through 3 below.
a. Days’ sales uncollectedd. Return on total assets
b. Accounts receivable turnover e. Total asset turnover
c. Working capitalf. Profit margin
1. Which two ratios are key components in measuring a company’s operating efficiency? Which ratio summarizes these two components?
2. What measure reflects the difference between current assets and current liabilities?
3. Which two short-term liquidity ratios measure how frequently a company collects its accounts?
Explain the difference between financial reporting and financial statements.
Why is a company’s capital structure, as measured by debt and equity ratios, important to financial statement analysts?
Simon Company’s year-end balance sheets follow. Express the balance sheets in common-size percents. Round amounts to the nearest one-tenth of a percent. Analyze and comment on the results.
At December 31 | 2017 | 2016 | 2015 |
Assets | |||
Cash | \( 31,800 | \) 35,625 | \( 37,800 |
Accounts receivable, net | 89,500 | 62,500 | 50,200 |
Merchandise inventory | 112,500 | 82,500 | 54,000 |
Prepaid expenses | 10,700 | 9,375 | 5,000 |
Plant assets, net | 278,500 | 255,000 | 230,500 |
Total assets | \)523,000 | \(445,000 | \)377,500 |
Liabilities and Equity | |||
Accounts payable | \(129,900 | 75,250 | \) 51,250 |
Long-term notes payable secured by mortgages on plant assets | 98,500 | 101,500 | 83,500 |
Common stock, \(10 par value | 163,500 | 163,500 | 163,500 |
Retained earnings | 131,100 | 104,750 | 79,250 |
Total liabilities and equity | \)523,000 | \(445,000 | \)377,500 |
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