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# Acc 561 Week 2 Wiley Plus Assignment E13-5, E13-6, E13-9

E13-5| | The comparative balance sheets of Nike, Inc. are presented here. | NIKE INC.

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| Comparative Balance Sheets| May 31| ————————————————- (\$ in millions)| Assets| 2007| 2006| Current assets| \$8,076| \$7,346| Property, plant, and equipment (net)| 1,678| 1,658| Other assets| ————————————————- 934| ————————————————- 866| Total assets| ————————————————- \$10,688| ————————————————- \$9,870| |  |  | Liabilities and Stockholders’ Equity| | |

Current liabilities| \$2,584| \$2,612| Long-term liabilities| 1,079| 973| Stockholders’ equity| ————————————————- 7,025| ————————————————- 6,285| Total liabilities and stockholders’ equity| ————————————————- \$10,688| ————————————————- \$9,870| | | | | | | | | | Correct. | |  | Complete the horizontal analysis of the balance sheet data for Nike using 2006 as a base. (If amount decreases, use either a negative sign preceding the number, e. g. 45 or parenthesis, e. g. (45). Round all percentages to 1 decimal place, e. g. 12. 5. ) NIKE, INC. | Condensed Balance Sheet| December 31| ————————————————- (\$ in millions)| |  |  | Increase or (Decrease)| | 2007| 2006| Amount| Percentage| Assets|  |  |  |  | Current assets| \$8,076| \$7,346| \$ 730 | 9. 9 %| Property, plant and equipment (net)| 1,678| 1,658| 20 | 1. 2 %| Other assets| ————————————————- 934| ————————————————- 866| ————————————————- 8 | ————————————————- 7. 9 %| Total assets| ————————————————- \$10,688| ————————————————- \$9,870| ————————————————- \$ 818 | ————————————————- 8. 3 %| |  |  |  |  | Liabilities and stockholders’ equity| | | | | Current liabilities| \$2,584| \$2,612| \$ -28 | -1. 1 %| Long-term liabilities| 1,079| 973| 106 | 10. 9 %| Total stockholders’ equity| ————————————————- 7,025| ————————————————- ,285| ————————————————- 740 | ————————————————- 11. 8 %| Total liabilities & stockholders’ equity| ————————————————- \$10,688| ————————————————- \$9,870| ————————————————- \$ 818 | ————————————————- 8. 3 %| | | | | | | | | | | | Correct. | |  | Complete the vertical analysis of the balance sheet data for Nike for 2007. (Round all of the percentages to 1 decimal place, e. g. 12. 5. NIKE, INC. | Condensed Balance Sheet| ————————————————- May 31, 2007| | \$ (in millions)| Percent | Assets|  |  | Current assets| \$8,076| 75. 6 %| Property, plant and equipment (net)| 1,678| 15. 7 %| Other assets| ————————————————- 934| ————————————————- 8. 7 %| Total assets| ————————————————- \$10,688| ————————————————- 100. 0 %| |  |  | Liabilities and stockholders’ equity| | | Current liabilities| \$2,584| 24. 2 %|

Long-term liabilities| 1,079| 10. 1 %| Stockholders’ equity| ————————————————- 7,025| ————————————————- 65. 7 %| Total liabilities and stockholder’s equity| ————————————————- \$10,688| ————————————————- 100. 0 %| | | | | | | | | | | | | | | | | | | | | | ————————————————- Top of FormBottom of Form| E13-6| | Here are the comparative income statements of Winfrey Corporation. | WINFREY CORPORATION| Comparative Income Statements| ———————————————— For the Years Ended December 31| | 2010| 2009| Net sales| \$598,000| \$520,000| Cost of goods sold| ————————————————- 477,000| ————————————————- 450,000| Gross profit| \$121,000| \$70,000| Operating expenses| ————————————————- 80,000| ————————————————- 45,000| Net income| ————————————————- \$41,000| ————————————————- \$25,000| | | | | | | | | Correct. | |  | Complete the horizontal analysis of the income statement data for Winfrey Corporation using 2009 as a base. (Round all percentages to 1 decimal place, e. g. 12. 5. ) WINFREY CORPORATION| Condensed Income Statements| ————————————————- For the Years Ended December 31| | | | Increase or (Decrease)| | | | ————————————————- During 2010| | ————————————————- 2010| ————————————————- 2009| ————————————————-

Amount | ————————————————- Percentage | Net sales| \$598,000| \$520,000| \$ 78,000 | 15. 0 %| Cost of goods sold | ————————————————- 477,000| ————————————————- 450,000| ————————————————- 27,000 | 6. 0 %| Gross profit| 121,000| 70,000| 51,000 | 72. 9 %| Operating expenses| ————————————————- 80,000| ————————————————- 45,000| ————————————————- 35,000 | 77. 8 %|

Net income| ————————————————- \$41,000| ————————————————- \$25,000| ————————————————- \$ 16,000 | 64. 0 %| | | | | | | | | | | | Correct. | |  | Complete the vertical analysis of the income statement data for Winfrey Corporation for both years. (Round all percentages to 1 decimal place, e. g. 12. 5. ) WINFREY CORPORATION| Condensed Income Statements| ————————————————- For the Years Ended December 31| | ————————————————- 010| ————————————————- 2009| | ————————————————- \$| ————————————————- Percent| ————————————————- \$| ————————————————- Percent| Net sales| \$598,000| 100. 0 %| \$520,000| 100. 0 %| Cost of goods sold| ————————————————- 477,000| ————————————————- 79. 8 %| ————————————————- 450,000| ————————————————- 86. 5 %| Gross profit| 121,000| 20. %| 70,000| 13. 5 %| Operating expenses| ————————————————- 80,000| ————————————————- 13. 4 %| ————————————————- 45,000| ————————————————- 8. 7 %| Net income| ————————————————- \$41,000| ————————————————- 6. 8 %| ————————————————- \$25,000| ————————————————- 4. 8 %| | | | | | | | | | | | | | | | | ————————————————- Top of FormBottom of Form| | E13-9| | Armada Company has these comparative balance sheet data: ARMADA COMPANY| Balance Sheets| ————————————————- December 31| | 2010| 2009| Cash| \$25,000| \$30,000| Receivables (net)| 65,000| 60,000| Inventories| 60,000| 50,000| Plant assets (net)| ————————————————- 200,000| ————————————————- 180,000| | ————————————————- \$350,000| ————————————————- \$320,000| |  |  | Accounts payable| \$50,000| \$60,000| Mortgage payable (15%)| 100,000| 100,000|

Common stock, \$10 par| 140,000| 120,000| Retained earnings| ————————————————- 60,000| ————————————————- 40,000| | ————————————————- \$350,000| ————————————————- \$320,000| Additional information for 2010: 1. | Net income was \$25,000. | 2. | Sales on account were \$375,000. Sales returns and allowances amounted to \$25,000. | 3. | Cost of goods sold was \$198,000. | 4. | Net cash provided by operating activities was \$48,000. | 5. | Capital expenditures were \$25,000, and cash dividends were \$18,000. Compute the following ratios at December 31, 2010. (Round to 3 decimal places, e. g. 2. 515. ) Current|   3. 00 :1| Receivables turnover|   5. 6 times| Average collection period|   65. 2 days| Inventory turnover|   3. 6 times| Days in inventory|   101. 4 days| Cash debt coverage|   . 31 times| Current cash debt coverage |   . 87 times| Free cash flow | | | | | | Current ratio| =| ————————————————- \$150,000| =| 3. 000 :1| | | \$50,000| | | Receivables turnover| =| ————————————————- \$350,000| =| 5. 600 times| | | \$62,500(1)| | | (1) (\$65,000 + \$60,000) ? Average collection period = 365 days ? 5. 600 = 65. 179 days Inventory turnover| =| ————————————————- \$198,000| =| 3. 600 times| | | \$55,000(2)| | | (2) (\$60,000 + \$50,000) ? 2 Days in inventory = 365 days ? 3. 600 = 101. 389 days Cash debt coverage ratio| =| ————————————————- \$48,000| =| 0. 310 times | | | (\$160,000 + \$150,000) ? 2 | | | Current cash debt coverage ratio| =| ————————————————- \$48,000| =| 0. 873 times | | | (\$60,000 + \$50,000) ? 2| | | Free cash flow = \$48,000 – \$25,000 – \$18,000 = \$5,000