common-size financial statements
TRANSCRIPT
COMMON-SIZE FINANCIAL STATEMENTS
Problem 16-15
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.
Requirement #1
Present the balance sheet in common-size format.
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
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
Requirement #2
Present the income statement in common-size format down through net income.
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 %
Requirement #3
Comment on the results of your analysis.
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.
ACCOUNTS RECEIVABLE
The entity maybe didn’t collect cash from the services renders on credit, or perhaps, sale on
accounts were increased.
INVENTORY
The entity maybe had produced more inventories, or there were still inventories not
sold.
PREPAID EXPENSES
The entity, perhaps, made an additional advanced payment either on rent or
insurance.
PROPERTY, PLANT AND EQUIPMENT
The entity improved the facilities, and added new equipments for a better system.
CURRENT LIABILITIES
The entity purchased more on account.
NOTE PAYABLE
The entity borrowed again from the bank.
SALES
The entity sold the inventories on account, since there were many inventories produced.