Please give me a complete answer?thank you very much :) 1. Prepare a vertical an
ID: 2473292 • Letter: P
Question
Please give me a complete answer?thank you very much :)
1.
Prepare a vertical analysis of both the balance sheets and income statements for 2015 and 2014 (Percentages may not add exactly due to rounding. Round your answers to 2 decimal places. (i.e., 2345 should be entered as 23.45).) REVNIK COMPANY Vertical Analysis of Balance Sheet As of December 31 2015 2014 Percentage of Amount Amount Amount Percentage of Assets Current assets Cash Marketable securities Accounts receivable (net) Inventories Prepaid items 2.76% $ 12.200 20,300 54,900 136,400 26,300 254,000 27,200 271,200 30,700 329,100 $ 583,100 8,000 47,300 144,400 10,400 222,300 23.39 Total current assets Investments Plant (net) 42.37 46.51 256,300 25,000 302,400 100.00 $524,700 Total long-term assets 56.44 57.63 100.00 Total assets Liabilities les Notes payable Accounts payable Salaries payable $15,500 113,000 20,900 149,400 2.66 $ 5,400 98,400 Total current liabilities 118,500 22.58 Non current liabilities Bonds payable Other revenues 98,900 30,300 129,200 278,600 98,900 26,500 25,400 243,900 16.96 18.85 Total noncurrent liabilities Total liabilities 47.78 46.48 Stockholders' equity Preferred stock. (par value $10.4% cumulative 62,000 62,000 180,500 304,500 $ 583,100 62,000 62,000 156,800 280,800 100.00% $ 524.700 10.63 10.63 30.96 52.22 non-participating: 6,200 shares authorized andissued) Common stock (No par, 50,000 shares authorized; 10,000 shares issued) Retained earnings 29.88 Total stockholders' equity Total liabilities and stockholders' equity 100.00%Explanation / Answer
1) Sale is taken as base for all % calculation . Vertical analysis compare each expense as % to Total Sale value and analyse it over different years
2 Summary for year 2015
25.62%
Only income from operations will be considered. Extraordinary income will not be considered while calculating return on investments and return on equity
2b) Return on investments = Income from operations / Total Assets
= 40400 / 277600, = 14.55 %
2c) Return on equity = Income from operations / Total equity
= 40400 / 157700 ,= 25.62 %
2 k Accounts receivable turnover ratio = Sales / Accounts receivable
It measures how many times accounts receivables rotate during a year
Accounts receivable turnover ratio = 210100 / 36700 , = 5.72 Times
2 l) Inventory turnover ratio = Cost of Goods sold / Inventory
It measures how many times inventory rotate during a year
100600
= 125100 / 100600, = 1.24 times
REVNIK Company Vertical analysis of income statement Amount 2015 Percentage of Total 2015 Amount 2014 Percentage of Total 2014 Revenue Sales (net) 230600 100% 210900 100% Other revenue 8700 4% 6100 3% Total revenues 239300 104% 217000 103% Expenses Cost of Goods sold 118600 51% 101100 48% Selling, general and administrative expense 53800 23% 48800 23% Interest expense 6700 3% 5900 3% Income tax expense 21500 9% 20500 10% Total Expense 200600 87% 176300 84% Net Income 38700 17% 40700 19%