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# Answers to questions start on PAGE 3

Description / Instructions: Complete the following in WileyPLUS: *Brief Exercise 13-4 *Brief
Exercise 13-5 *Brief Exercise 13-8 (essay) *Brief Exercise 13-9 (essay) *Brief Exercise 13-10
*Brief Exercise 13-13 *Brief Exercise 13-15

Question 1
Using these data from the comparative balance sheet of Rosalez Company, perform
horizontal analysis. (If amount and percentage are a decrease show the
numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round
percentages to 0 decimal places, e.g. 12%.)
Increase or (Decrease)
Dec. 31,
2012

Dec. 31,
2011

Accounts
receivable

\$ 512,300

\$ 369,200

Inventory

\$ 794,900

\$ 585,100

\$3,168,300

\$2,708,800

Total assets

Amount

Percentage

Question 2
Using these data from the comparative balance sheet of Rosalez Company, perform
vertical analysis. (Round percentages to 1 decimal place, e.g. 12.5%.)
Dec. 31, 2012
Amount
Percentage

## Dec. 31, 2011

Amount
Percentage

Accounts receivable

\$ 501,200

\$ 397,600

Inventory

\$ 812,300

\$ 642,100

\$3,142,500

\$2,822,200

Total assets

## Answers to questions start on PAGE 3

Question 3
Vertical analysis (common-size) percentages for Vallejo Companys sales, cost of goods
sold, and expenses are listed here.
Vertical Analysis
Sales

2012
100 %

2011
100 %

2010
100

## Cost of goods sold

61.1

63.5

66.1

Expenses

25.2

26.4

29.5

Did Vallejos net income as a percent of sales increase, decrease, or remain unchanged

Question 4
Horizontal analysis (trend analysis) percentages for Spartan Companys sales, cost of

## goods sold, and expenses are listed here.

Horizontal Analysis
Sales

2012
96.2 %

2011

2010

104.8 %

100.0

101.0

98.0

100.0

Expenses

105.6

95.4

100.0

## Explain whether Spartans net income increased, decreased, or remained unchanged

over the 3-year period.

Question 5

These selected condensed data are taken from recent balance sheets of Bob Evans
Farms (in thousands).
2009
Cash

2008

\$ 13,606

Accounts receivable

23,045

Inventories

31,087

12,522

\$ 80,260

\$245,805

\$326,203

## Answers to questions start on PAGE 3

Compute the current ratio for each year. (Round answers to 2 decimal places,
e.g. .12 : 1.)
2009
Current ratio:

2008

:1

:1

Question 6
Staples, Inc. is one of the largest suppliers of office products in the United States.
It had net income of \$738.7 million and sales of \$24,275.5 million in 2009. Its total
assets were \$13,073.1 million at the beginning of the year and \$13,717.3 million at
the end of the year. What is Staples, Inc.s asset turnover ratio and profit margin
ratio?(Round answers to 2 decimal places, e.g. 1.25 or 2.05%.)

times

## Profit margin ratio

Question 7
Selected data taken from a recent years financial statements of trading card
company Topps Company, Inc. are as follows (in millions).
Net sales
Current liabilities, beginning of year

## Current liabilities, end of year

Net cash provided by operating activities
Total liabilities, beginning of year
Total liabilities, end of year
Capital expenditures
Cash dividends
Compute these ratios: current cash debt coverage ratio, cash debt coverage ratio, and
free cash flow. Provide a brief interpretation of your results. (Round answers to 2
decimal places, e.g. 0.12.)

times

times
\$

millions

## Answers to questions start on PAGE 3

Question 1
Using these data from the comparative balance sheet of Rosalez Company, perform
horizontal analysis. (If amount and percentage are a decrease show the numbers
as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 0
decimal places, e.g. 12%.)

Accounts receivable

\$ 512,300

Inventory
Total assets

## Dec. 31, 2011

\$ 369,200

\$ 794,900

\$ 585,100

\$3,168,300

\$2,708,800

Increase or (Decrease)
Amount
Percentage
38.8 %
\$ 143,100
35.9 %
\$ 209,800
\$ 459,500

17.0 %

Question 2
Using these data from the comparative balance sheet of Rosalez Company, perform vertical
analysis. (Round percentages to 1 decimal place, e.g. 12.5%.)

Inventory

## Dec. 31, 2012

Amount
Percentage
15.9 %
\$ 501,200
25.8 %
\$ 812,300

Total assets

\$3,142,500

Accounts receivable

100 %

## Dec. 31, 2011

Amount
Percentage
14.1 %
\$ 397,600
22.8 %
\$ 642,100
\$2,822,200

100 %

Question 3
Vertical analysis (common-size) percentages for Vallejo Companys sales, cost of goods sold,
and expenses are listed here.
Vertical Analysis
Sales

2012
100 %

2011
100 %

2010
100 %

## Answers to questions start on PAGE 3

Cost of goods sold

61.1

63.5

66.1

Expenses

25.2

26.4

29.5

Did Vallejos net income as a percent of sales increase, decrease, or remain unchanged over
For 2012: 100-61.6-25.2=13.7 For 2011: 100-63.5-26.4=10.1 For 2010: 100-66.129.5=4.4 The net income increased as a percent of sales due to the decrease in both the
cost of goods sold and expenses each year.

Question 4
Horizontal analysis (trend analysis) percentages for Spartan Companys sales, cost of goods
sold, and expenses are listed here.
Horizontal Analysis
Sales

2012
96.2 %

2011

2010

104.8 %

100.0

## Cost of goods sold

101.0

98.0

100.0

Expenses

105.6

95.4

100.0

Explain whether Spartans net income increased, decreased, or remained unchanged over
the 3-year period.
2010: 100-100-100=0 2011: 104.8-98.0-95.4=(88.6) 2012: 96.2-101.0-105.6=(110.4)
In 2010 the net income is 0. In 2011 it decreased as a percent of sales in which sales
increased but the cost of goods and expenses slightly decreased. In 2012 net sales further
decreased and the cost of goods and expenses increased.

## Answers to questions start on PAGE 3

Question 5
These selected condensed data are taken from recent balance sheets of Bob Evans
Farms (in thousands).
2009
Cash

2008

\$ 13,606

\$ 7,669

Accounts receivable

23,045

19,951

Inventories

31,087

31,345

12,522

11,909

\$ 80,260

\$ 70,874

## Total current liabilities

\$245,805

\$326,203

Question 5
Compute the current ratio for each year. (Round answers to 2 decimal places, e.g. .12
: 1.)

Current ratio:

Question 6

2009
.33:1

2008
.22:1

## Answers to questions start on PAGE 3

Staples, Inc. is one of the largest suppliers of office products in the United States. It had net
income of \$738.7 million and sales of \$24,275.5 million in 2009. Its total assets were
\$13,073.1 million at the beginning of the year and \$13,717.3 million at the end of the year.
What is Staples, Inc.s asset turnover ratio and profit margin ratio? (Round answers to 2
decimal places, e.g. 1.25 or 2.05%.)
Asset turnover ratio
Profit margin ratio

1.81 times
3.04 %

Question 7
Selected data taken from a recent years financial statements of trading card company Topps
Company, Inc. are as follows (in millions).
Net sales

\$326.7

41.1

62.4

10.4

65.2

## Total liabilities, end of year

73.2

Capital expenditures

3.7

Cash dividends

6.2

Compute these ratios: current cash debt coverage ratio, cash debt coverage ratio, and free
cash flow. Provide a brief interpretation of your results. (Round answers to 2 decimal
places, e.g. 0.12.)
Current cash debt coverage ratio
Cash debt coverage ratio
Free Cash Flow

0.20 times
0.15 times
\$ 0.5 millions