common-size financial statements
TRANSCRIPT
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COMMON-SIZE FINANCIAL STATEMENTS
Problem 16-15
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PROBLEMRefer to the financial statement data for Lyndex
Company in Problem 16-14.
REQUIREMENTS1. Present the balance sheet in common-size format.2. Present the income statement in common-size
format down through net income.3. Comment on the results of your analysis.
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Requirement #1
Present the balance sheet in common-size format.
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Lyndex CompanyCommon-Size Comparative Balance Sheet
Common-size percentages
This year Last year This year Last year
ASSETS
Current assets:
Cash 960, 000 1,260,000 5.61 % 8.47 %
Marketable securities 0 300,000 0 % 2.02 %
Accounts receivable, net 2,700,000 1,800,000 15.79 % 12.10 %
Inventory 3,900,000 2,400,000 22.81% 16. 13 %
Prepaid Expenses 240,000 180,000 1.40 % 1.21 %
Total current assets 7,800,000 5,940,000 45.61 % 39.92 %
Plant and equipment, net 9,300,000 8,940,000 54.39 % 60.08 %
Total Assets 17,100,000 14,880,000 100 % 100 %
=Cash/Total Assets
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Liabilities and Stockholder’s Equity
Common-size percentages
This year Last year This year Last year
Liabilities:
Current liabilities 3,900,000 2,760,000 22.81 % 18.55 %
Note payable, 10 % 3,600,000 3,000,000 21.05 % 20.16 %
Total Liabilities 7,500,000 5,760,000 43.86 % 38.71 %
Stockholder’s equity:
Preferred Stock, 8 %, P30 par value 1,800,000 1,800,000 10.53 % 12.10 % Common stock, 80 par value 6,000,000 6,000,000 35. 09 % 40.32 % Retained Earnings 1,800,000 1,320,000 10. 53 % 8.87 %
Total stockholder’s equity 9,600,000 9,120,000 56. 14 % 61.29 %
Total liabilities and stockholder’s equity 17,100,000 14,880,000 100 % 100 %
=Current Liabilities/
Total Liabilities and
SHE
=Preferred Stock/ Total
Liabilities and SHE
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Requirement #2
Present the income statement in common-size format down through net income.
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Lyndex CompanyCommon-Size Comparative Income Statement and
ReconciliationCommon-size percentages
This year Last year This year Last year
Sales (all account) 15,750,000 12,480,000 100 % 100 %
Cost of goods sold 12,600,000 9,900,000 80 % 79.33 %
Gross margin 3,150,000 2,580,000 20 % 20.67 %
Selling and administrative expenses 1,590,000 1,560,000 10.10 % 12.50 %Net operating income 1,560,000 1,020,000 9.90 % 8.17 %
Interest expense 360,000 300,000 2.29 % 2.40 %
Net income before taxes 1,200,000 720,000 7.62 % 5.77 %
Income taxes (30%) 360,000 216,000 2.29 % 1.73 %
Net income 840,000 504,000 5.33 % 4.04 %
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Requirement #3
Comment on the results of your analysis.
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CASH
Cash decreases this year. We think that it has got to do with the statement of cash flow wherein the entity generates more cash outflow than
inflow.
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ACCOUNTS RECEIVABLE
The entity maybe didn’t collect cash from the services renders on credit, or perhaps, sale on
accounts were increased.
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INVENTORY
The entity maybe had produced more inventories, or there were still inventories not
sold.
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PREPAID EXPENSES
The entity, perhaps, made an additional advanced payment either on rent or
insurance.
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PROPERTY, PLANT AND EQUIPMENT
The entity improved the facilities, and added new equipments for a better system.
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CURRENT LIABILITIES
The entity purchased more on account.
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NOTE PAYABLE
The entity borrowed again from the bank.
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SALES
The entity sold the inventories on account, since there were many inventories produced.