Analyzing Financial Statements Summary

CHA P TER 14
Analyzing Financial Statements: A Managerial Perspective

Summary of Questions by Objectives and Bloom’s Taxonomy
Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT
True-False Statements
1. 1 K 7. 2 C 13. 2 K 19. 4 K 25. 6 K
2. 1 K 8. 2 K 14. 2 K 20. 4 K 26. 6 K
3. 1 C 9. 2 K 15. 2 K 21. 5 K 27. 7 K
4. 1 C 10. 2 C 16. 2 K 22. 5 K 28. 7 K
5. 1 K 11. 3 K 17. 3 K 23. 5 K 29. 7 K
6. 2 C 12. 2 K 18. 3 K 24. 5 C 30. 7 K
Multiple Choice Questions
31. 1 K 53. 7 K 75. 5 AP 97. 7 C 119. 7 AP
32. 1 K 54. 5 K 76. 6 K 98. 7 AP 120. 2 AP
33. 6 K 55. 5 C 77. 6 K 99. 7 AP 121. 5 AP
34. 5 K 56. 7 K 78. 6 K 100. 7 AP 122. 5 AP
35. 2 C 57. 5 K 79. 6 K 101. 7 AP 123. 2 C
36. 5 K 58. 5 C 80. 6 K 102. 2 AP 124. 5 AP
37. 5 K 59. 5 K 81. 6 K 103. 5 AP 125. 5 AP
38. 5,6 K 60. 5 K 82. 6 AP 104. 5 AP 126. 5 AP
39. 5,6 C 61. 5 K 83. 6 AP 105. 2 AP 127. 6 AP
40. 2 K 62. 6,7 C 84. 6 AP 106. 2 AP 128. 6 AP
41. 5 K 63. 5 C 85. 6 AP 107. 2 C 129. 6 AP
42. 6 K 64. 5 AP 86. 6 AP 108. 5 AP 130. 6 C
43. 2 K 65. 5 AP 87. 6 K 109. 5 AP 131. 7 AP
44. 2 K 66. 5 AP 88. 6 K 110. 5 AP 132. 7 AP
45. 2 K 67. 5 AP 89. 6 C 111. 5 C 133. 7 AP
46. 2 K 68. 5 AN 90. 6 AP 112. 6 AP 134. 7 AP
47. 2 K 69. 5 AN 91. 6 AP 113. 6 AP 135. 7 AP
48. 2 C 70. 5 AP 92. 6 AP 114. 6 AP 136. 7 AN
49. 2 C 71. 5 AP 93. 7 K 115. 6 AP 137. 7 AN
50. 2 AP 72. 5 AP 94. 7 K 116. 7 AP 138. 7 AN
51. 3 C 73. 5 AP 95. 7 C 117. 7 AP
52. 2 K 74. 5 AP 96. 7 C 118. 7 AP
Matching
139. 1,2, K
4,5
Exercises
140. 2 AP 144. 2 AN 148. 5,6,7 AN 152. 5,6,7 AN
141. 2 AP 145. 4 AN 149. 5 AP 153. 7 AN
142. 2 AN 146. 4 AN 150. 6 AP 154. 7 AN
143. 2 AN 147. 5 AN 151. 6 AN 155. 7 AP
Challenge Exercises
156. 7 AN 157. 6 AN 158. 5 AN
Short-Answer Essays
159. 1 K 161. 2 K 163. 4 C 165. 5 C
160. 1 K 162. 5 C 164. 6 C 166. 6 C
14-2 Test Bank to accompany Jiambalvo Managerial Accounting, 5th Edition
TRUE-FALSE
1. A managerial accountant may analyze his/her company’s own financial statements in order to
assess the appearance of his/her firm to investors.
2. One reason a managerial accountant might need to analyze financial statements of other firms is
to assess the viability of a vendor.
3. To assess control of operations, managers expect that successful implementation of their plan will
be reflected in subsequent financial statements as substantially increased profits.
4. It is important for managers to analyze their company’s financial statements so that they can
anticipate and answer questions from investors and creditors.
5. In general, managers should analyze financial statements primarily from the perspective of their
customers.
6. Whenever an asset increases, the corresponding part of the transaction will always be an increase
to net income.
7. Vertical analysis is performed on the balance sheet because it represents a point in time, while
horizontal analysis is performed on the income statement because it covers a period of time.
8. An increase in gross margin of 7% from one period to the next implies that the company’s net
income will have increased by 7% as well.
9. The statement of cash flows divides a company’s profitability into operating, investing, and
financing activities.
10. If sales revenue of a retail company increases by 10% because the company sells more units of
product, the company’s cost of goods sold will increase by 10% as well.
11. If a company records fictitious sales, income will increase, but operating cash flows will not be
affected.
12. Common size financial statements are an example of horizontal analysis.
13. Horizontal analysis examines the change in financial statement amounts over time.
14. One example of vertical analysis is the determination that long-term assets increased by 2.5%
over time.
15. One example of vertical analysis is the determination that interest expense rose from 1.2% of net
sales to 1.4% of net sales from one period to the next period.
16. When the amount of net sales is used as the base amount for all income statement items,
horizontal analysis is being performed.
17. If net income is substantially less than operating cash flows, this is a sign of possible accounting
irregularities.
Chapter 14 Analyzing Financial Statements: A Managerial Perspective 14-3
18. Recording fictitious sales will cause operating cash flows and net income to increase.
19. The management discussion and analysis section of the annual report explains financial results
that are not obvious simply from reading the basic financial statements.
20. News articles and credit reports are valuable sources of financial information.
21. Financial leverage relates to a company’s use of debt financing to acquire and use productive
assets.
22. Earnings per share is the amount of net income earned in a company that is paid out as cash
dividends to shareholders.
23. The gross margin percentage is a turnover ratio that measures the efficiency with which a
company sells its products.
24. If a company’s return on total assets is higher than its return on common stockholders’ equity, a
company is using financial leverage effectively.
25. An increase in inventory turnover implies that a company is selling its inventory and collecting
cash from customers more quickly.
26. Turnover ratios involve both a balance sheet and an income statement account.
27. Debt-related ratios reveal the ability of a company to pays its obligations when they become due.
28. A high debt-to-equity ratio implies that a company has more risk than a company with a low
ratio.
29. Times interest earned measures how many times operating income is able to pay the company’s
interest expense.
30. The acid-test ratio is a more stringent test of a company’s ability to pay its short-term debt
compared to the current ratio.
Answers
1 T 7 F 13 T 19 T 25 F
2 T 8 F 14 F 20 T 26 T
3 F 9 F 15 T 21 T 27 T
4 T 10 T 16 F 22 F 28 T
5 F 11 T 17 F 23 F 29 T
6 F 12 F 18 F 24 F 30 T
MULTIPLE CHOICE
31. Which of the following is not a reason that managers need to analyze financial reports?
A. To assess control of operations
B. To assess the ability of customers to pay their bills
C. To assess the viability of suppliers
D. To maximize annual bonuses
32. Which of the following is a reason that managers use financial statements?
A. To assess the company’s image
B. To assess the product cost of competitors
C. To assess competitors’ contribution margins
D. To assess the long-term viability of key customers
33. Which of the following does accounts receivable turnover measure?

A. The ability of a company to pay its short-term obligations
B. The number of times receiveables are collected during the period
C. The efficiency with which a company generates sales on credit
D. The length of time it takes to collect receivables
34. Which of the following indicates the amount investors are willing to pay per dollar of earnings?
A. Market price per share of a company’s stock
B. Earnings per share
C. Price-earnings ratio
D. Return on total assets
35. Using the balance sheet equation, which of the following is not a possible transaction?
A. Increase an asset and increase stockholders’ equity
B. Increase a liability and decrease stockholders’ equity
C. Increase an asset and decrease a liability
D. Decrease an asset and decrease a liability
36. Which of the following is the return a company is able to earn on funds invested by shareholders?
A. Return on total assets
B. Return on common stockholders’ equity
C. Price-earning ratio
D. Dividends paid
37. Which of the following is not an operating activity on the statement of cash flows?
A. Paying a dividend
B. Paying for inventory purchases
C. Collecting cash from the sale of merchandise
D. Paying cash for income taxes
38. Which of the following is not a profitability ratio?

A. Price-earnings ratio
B. Return on total assets
C. Earnings per share
D. Asset turnover
39. Which of the following changes is the least favorable?

A. An increase in inventory turnover
B. A decrease in operating expenses
C. An increase in the price-earnings ratio
D. A decrease in the asset turnover
40. Net cash provided by operations represents

A. net income converted to a cash basis.
B. the net increase in cash and cash equivalents for a period.
C. the cash provided by selling inventory to customers.
D. a measure of profitability.
41. What does financial leverage measure?

A. How quickly a company generates profit from its assets
B. How quickly a company is turning its net income into cash
C. The overall efficiency with which a company uses assets to generate revenues
D. How effectively the company uses debt financing to acquire economic resources
42. What is asset turnover?

A. How quickly a company generates profit from its assets
B. How quickly a company is turning its net income into cash
C. The overall efficiency with which the company uses assets to generate revenues
D. How quickly the company acquires economic resources
43. Which of the following is true concerning vertical analysis?

A. It is a technique for evaluating a series of financial statement data over a period of time.
B. It is used to determine the increase or decrease that has taken place over a period of time.
C. It is expressed as a percentage of the base year amount of the same account.
D. It is also called common size analysis.
44. Which of the following is true concerning horizontal analysis?

A. It is also called common size analysis.
B. It consists of analyzing changes in financial statement amounts across time.
C. It consists of analyzing financial statements in terms of a base amount.
D. It restates each income statement line item as a percentage of net sales.
45. Which type of analysis would highlight the percentage increase in sales from one year to the
next?
A. Horizontal analysis
B. Vertical analysis
C. Common size analysis
D. Comprehensive analysis
46. What type of analysis will you perform to compare the gross margin percentage from one year to
the next?
A. Debt-related analysis
B. Turnover analysis
C. Horizontal analysis
D. Vertical analysis
47. In which of the following will the percentage increase in sales from one year to the next be most
obvious?
A. Profitability analysis
B. Turnover analysis
C. Horizontal analysis
D. Vertical analysis
48. If the rate of growth in sales is greater than the rate of growth in cost of goods sold from one year
to the next, which of the following will you most likely expect?
A. The gross margin percentage is increasing.
B. The gross margin percentage is decreasing.
C. Accounts receivable turnover is declining.
D. Inventory turnover is declining.
49. Which of the following will vertical analysis allow managers to readily identify?
A. Sales are increasing at a faster rate than selling expenses
B. The percentage change in sales from the prior year
C. Sales are growing at a faster rate than assets
D. Income taxes are a larger percentage of sales in the current year compared to a previous
year
50. Gross margin in 2014 for Beaver Enterprises totaled $1,000,000. If cost of goods sold is 60% of
sales, how much is sales?
A. $400,000
B. $600,000
C. $1,666,667
D. $2,500,000
51. If management is manipulating earnings to achieve performance targets, what outcome may
result?
A. Net income may exceed cash from operations.
B. Cash from investing activities will exceed cash from financing activities.
C. Cash will experience a net decrease.
D. Total assets will increase.
52. Where can you find insight of why sales has increased by 32% from a prior period?
A. Common size financial statements
B. Management’s discussion and analysis
C. The balance sheet
D. Horizontal analysis
53. Which of the following is a stringent measure of a company’s ability to repay obligations in a
short period of time?
B. Current ratio
C. Acid-test ratio
D. Debt turnover
54. Which of the following ratios measures how many multiples of the firm’s earnings that investors
are willing to pay for the company’s stock?
C. Price-earnings ratio
D. Time interest earned
55. Which of the following most likely indicates that a company is making good use of financial
leverage?
A. The price-earnings ratio exceeds that of competitors.
B. Earnings per share is higher than the dividends paid per share.
C. Net income is higher than cash from operations.
D. Return on common stockholders’ equity is higher than the return on total assets.
56. What effect does financing with debt have on a company?

A. It will increase financial risk.
B. It will decrease the potential return for shareholders.
C. It will create a requirement to pay dividends.
D. It will decrease turnover.
57. Which of the following is not a profitability ratio?

A. Inventory turnover
B. Gross margin percentage
D. Return on total assets
58. Which ratio measures the rate earned on a company’s total economic resources?
C. Return on total assets
D. Return on common stockholders’ equity
59. Which ratio is a measure of the profit available to common shareholders on each share of
common stock outstanding?
60. Which statement is true concerning the gross margin percentage?

A. It indicates how much a company earns per dollar of sales taking into account the cost of
items it sells.
B. It indicates how much earnings are generated on each share of common stock.
C. It indicates the amount of sales generated for each dollar of assets.
D. It measures the amount of net income generated for each dollar of sales.
61. Which of the following ratios is a measure of the company’s profitability to its market price?
62. Which of the following is not used to measure the efficiency with which a firm uses its assets?
A. Inventory turnover ratio
B. Current ratio
C. Accounts receivable turnover ratio
D. Asset turnover
63. Which of the following is a common effect when return on common stockholders’ equity is
greater than return on total assets?
A. Financial leverage is being used effectively.
B. The company has no debt.
C. The company’s profit is declining.
D. Earnings per share will be extremely large.
64. Cost of goods sold in 2014 for Reno Parts Company totaled $4,530,000. If the gross margin
percentage is 56%, how much are sales ?
A. $10,295,454
B. $7,066,800
C. $8,089,286
D. None of these answer choices are correct.
65. The gross margin amount in 2014 for the Billings Corporation totaled $800,000. If cost of goods
sold is 80% of sales, how much is sales?
A. $960,000
B. $4,000,000
C. $3,200,000
D. $1,440,000
66. Bonanza, Incorporated’s net income in 2014 was $378,000. The company had 75,000 shares of
common stock outstanding and 35,000 shares of preferred stock outstanding. No shares were
issued or repurchased during the year. The company paid dividends of $1.50 per share on the
common stock and $1.80 per share on the preferred stock. How much is earnings per share for
2014?
A. $3.44
B. $4.20
C. $4.34
D. $5.04
67. Best Corporation’s net income in 2014 was $1,295,000. The company had 500,000 shares of
common stock outstanding and 90,000 shares of preferred stock outstanding. No shares were
issued or repurchased during the year. The company paid dividends of $0.70 per share on the
common stock and $0.80 per share on the preferred stock. How much profit did Best generate for
each share of outanding common stock in 2014?
A. $1.15
B. $2.45
C. $2.59
D. $2.19
68. Bread Enterprises had a current ratio of 3.5 on December 31 of the current year. On that date, the
company’s assets were as follows:
Cash $ 200,000
Accounts receivable, net 600,000
Inventory 960,000
Prepaid expenses 25,000
Equipment, net 2,200,000
Total assets $3,985,000
What impact will issuing common stock for cash have on the company’s earnings per share?
A. It will increase earnings per share.
B. It will decrease earnings per share.
C. There will be no change.
D. The number of common shares outstanding is needed to determine the answer.
69. Bread Enterprises had a current ratio of 2.5 on December 31 of the current year. On that date, the
company’s assets were as follows:
Cash $ 100,000
Inventory 960,000
What impact will an increase in the market price of the company’s common stock from $24.50 to
$37.20 have on a company’s price-earnings ratio?
A. It will increase the price-earnings ratio.
B. It will decrease the price-earnings ratio.
C. There will be no change.
D. There is not enough information to determine the answer.
70. Lane Class Company had 50,000 shares of common stock outstanding and 10,000 shares of
preferred stock outstanding. No shares were issued or repurchased during the year. The company
paid a dividend of $0.80 per share of common stock and $0.60 per share of preferred stock. If the
company reports earnings per common share of $0.85, how much is net income?
A. $42,500
B. $56,500
C. $48,500
D. $57,000
71. Blue Corporation reported earnings per share of common stock at $12 in 2014 and paid dividends
of $3 per share. The current market price per share is $102 and the book value per share is $54.
Blue Corporation has no preferred stock. How much is the company’s price-earnings ratio?
A. $11.80
B. $1.90
C. $8.50
D. $11.30
72. McDonald Company’s net income in 2014 was $200,000. The company paid preferred dividends
of $32,000 and common stock dividends of $10,000. It average common stockholders’ equity
was $850,000 during 2014. How much is the company’s return on common stockholders’ equity
for 2014?
A. 19.8%
B. 23.5%
C. 18.6%
D. 4.3%
73. The following is from Nantucket Limited’s records for 2014:

Account Balances January 1 December 31
Common stock $210,000 $250,000
Additional paid-in-capital 95,000 110,000
Retained earnings 105,000 195,000
During 2014, the company paid dividends of $15,000 on its common stock. The company’s net
income for the year was $105,000. How much is the company’s return on common stockholders’
equity for the year ending December 31, 2014?
A. 18.9%
B. 16.2%
C. 22.0%
D. 25.6%
74. Relish Holdings had 250,000 shares of common stock outstanding and 40,000 shares of preferred
stock outstanding. No shares were issued or repurchased during the year. The company paid a
dividend of $1.50 per share of common stock and $2 per share of preferred stock. If the company
reported earnings per common share of $1.60, how much would net income have been?
A. $480,000
B. $400,000
C. $156,250
D. $320,000
75. Denton Limited Company reported earnings per share of common stock $2 in 2014 and paid
dividends of $1.50 per share. Denton has no preferred stock issued. The current market price per
share is $15 and the book value per share is $14. How much is Denton’s price-earnings ratio?
A. $6.75
B. $7.50
C. $7.00
D. $30.00
76. Asset turnover is

A. net income divided by sales.
B. net sales divided by total assets.
C. net sales divided by current assets.
D. earnings per share divided by the market price per share of stock.
77. Asset turnover is a measure of

A. how quickly a company is replacing its old plant assets with new plant assets.
B. how quickly a company is turning its sales into cash.
C. the overall efficiency with which the company uses assets to generate revenues.
D. how rapidly the stock market believes the company will grow.
78. Inventory turnover

A. is a measure of the profitability of selling inventory.
B. is used to calculate how quickly customers pay for inventory they purchased.
C. is an indicator of how quickly suppliers are being paid by the company.
D. measures how efficiently a company sells it inventory.
79. The higher the amount of a company’s accounts receivable turnover,

A. the shorter time period it takes to collect a receivable.
B. the more assets a company has tied up in receivables.
C. the longer it takes a company to collect its receivables.
D. the more likely a company will experience cash flow problems.
80. Which statement is true concerning the current ratio?

A. It is usually a larger amount than the acid-test ratio.
B. It is a more stringent test of a company’s ability to pay its short-term obligations.
C. It measures a company’s ability to manage its assets efficiently.
D. It measures a company’s ability to make interest payments on debt.
81. Wangley Company has an inventory turnover of 8. Which statement is true?

A. Wangley has about 2 months of sales in its inventory.
B. Wangley takes about 46 days from the time an item is sold until Wangley collects the
cash.
C. Wangley takes about one month from the time an item is purchased until the cash is
collected from the sale of the inventory.
D. Wangley sells it inventory 8 times faster than other companies.
82. Redzone Corporation reported $400,000 in sales on account plus another $60,000 in cash sales
last year. Cost of goods sold for the period totaled $220,000. The beginning balance in accounts
receivable was $32,000 and the ending balance was $50,000. How much is the company’s
accounts receivable turnover?
A. 9.2 times
B. 4.8 times
C. 8.0 times
D. 12.5 times
83. Fenwick Holdings reported cash sales in 2014 of $220,000. Accounts receivable at the beginning
of the year totaled $420,000, with a balance of $490,000 at the end of the year. If the company’s
accounts receivable turnover is 3.5 for the year, how much are its total sales for the year?
A. $2,250,000
B. $1,715,000
C. $1,495,000
D. $1,935,000
84. Real Crisp Company reported cost of goods sold of $800,000 last year. The company’s beginning
inventory balance was $58,000 and the ending inventory balance was $54,000. How many days
will it take the company to sell its inventory as of year end?
A. 13.8 days
B. 14.8 days
C. 24.6 days
D. 26.5 days
85. Benzo Limited reported an inventory turnover of 14.5 times last year. Beginning inventory was
$290,000 and ending inventory was $260,000. How much was cost of goods sold?
A. $3,770,000
B. $3,987,500
C. $4,205,000
D. $7,975,000
86. Zin Company repoted cost of goods sold of $1,500,000 last year. The company’s beginning
inventory balance was $110,000 and the ending inventory balance was $86,000. How many days
will it take the company to sell off all of its inventory?
A. 13.6 days
B. 17.4 days
C. 20.9 days
D. 26.8 days
87. Which of the following is the most stringent test of a company’s ability to meet its current
obligations?
A. Current ratio
B. Quick ratio
C. Debt-equity ratio
D. Times interest earned
88. Which of the following is included in the calculation of the current ratio, but not the quick ratio?
A. Inventory
B. Cash
C. Accounts receivable
D. Marketable securities
89. Wilker Industries has a current ratio of 1.8. If Wilker collects a payment from a customer on
account, what is expected to happen to the company’s current ratio?
A. It will increase.
B. It will decrease.
C. It will stay the same.
D. The effect is based on the amount of debt a company holds at the end of the period.
90. Organic Ways is a large food and drug retailer with more than 1,700 stores in the U.S. and
Canada. The following financial information relates to fiscal years, 2013 and 2014.
(In Millions) 2014 2013
Sales $34,286 $38,185
Cost of goods sold 32,000 34,000
Accounts receivable 577 461
Merchandise inventory 2,905 2,510
How much is the company’s inventory turnover for 2014?
A. 9.08 times
B. 11.02 times
C. 11.80 times
D. 33.12 times
91. Waylon Appliances is a large applicance retailer with more than 800 stores in the U.S. The
following financial information relates to fiscal 2013 and 2014.
(In Millions) 2014 2013
Sales $42,286 $40,185
Accounts receivable 820 960
Merchandise inventory 2,900 2,700
How much is the company’s days’ sales in inventory for 2014 and 2013, respectively?
A. 32.08, 31.79 days
B. 41.52, 41.91 days
C. 11.38, 11.48 days
D. 2.13; 3.15 days
92. Brick Works, Inc. had a current ratio of 1.5 to 1 on December 31 of the current year. On that date,
the company’s assets were as follows:
Cash $ 100,000
Inventory 960,000
What impact will collecting $56,000 due from customers have on Brick Work’s inventory
turnover?
A. It will increase.
B. It will decrease.
C. It will have no effect.
D. The amount of current liabilities is needed to determine the answer.
93. A company has a high debt-to-equity ratio. What other amount will most likely be high for the
company?
A. The company’s level of risk
B. The company’s assets
D. Net income
94. What does times interest earned measure?

A. The ability of a company to make interest payments on its debt
B. The ability of a company to pay its interest-bearing debt obligations
C. The increase in interest expense as a result of new debt obligations acquired during the
period
D. The average interest rate incurred on the company’s debt
95. What does a quick ratio of less than one typically indicate?
A. The company does not have enough quick assets to settle its current liabilities.
B. The company is unprofitable.
C. The company has a very high debt-to-equity ratio.
D. All of the answer choices are correct.
96. RT Enterprises has a current ratio of less than one, and a very high debt-to-equity ratio. Which of
the following will management of other companies most likely be reluctant to do?
I. Sign an agreement with RT Enterprises to become a major supplier
II. Sell RT Enterprises goods on credit
III. Expand capacity to better serve the needs of RT Enterprises
A. I and II
B. II and III
C. I and III
D. I, II, and III
97. Which of the following is not a communication by a company’s management that may help
alleviate investors and creditors concerns of the company’s financial statements?
A. News articles
B. Notes to their financial statements
C. Assessment of vendors and customers
D. Press releases
98. Cramer Cooling Company reported the following results for the year just ended:
Cash $50,000
Accounts receivable 45,000
Prepaid insurance 10,000
Inventory 51,300
Cramer Cooling’s acid-test ratio is 1.25. How much are the company’s current liabilities?
A. $76,000
B. $84,000
C. $125,040
D. $117,040
99. Planter Zone’s working capital is $32,500 and its current assets are $85,100. How much is the
company’s current ratio?
A. 0.72
B. 1.62
C. 2.62
D. 1.38
100. Seekers Limited reported the following results for the year just ended:
Cash $ 30,000
Accounts receivable 90,000
Inventory 150,000
The company’s quick ratio was 0.90 for the year. How much are the company’s current
liabilities?
A. $120,000
B. $133,333
C. $266,667
D. $108,000
101. Kerwin Holdings has total assets of $450,000 and shareholders’ equity of $120,000, of which
$45,000 of the equity is common stock. How much is the company’s debt-to-equity ratio?
A. 3.75
B. 2.75
C. 6.00
D. 4.40
102. Comparative financial statements for Bent Stew Enterprises are shown below:
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Accounts receivable 8,500 6,000
Inventory 12,000 8,200
Prepaid expenses 1,400 900
Total current assets 24,900 15,900
Property, plant, and equipment, net 103,600 123,300
Intangible assets, net 64,000 47,000
Total assets $192,500 $186,200
Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable $ 11,000 $ 12,000
Other current liabilities 11,800 3,200
Total current liabilities 22,800 15,200
Long-term debt 120,000 128,000
Total liabilities 142,800 143,200
Stockholders’ equity:
Common stock 15,000 15,000
Additional paid-in capital 20,000 20,000
Total stockholders’ equity 49,700 43,000
Total liabilities and stockholders’ equity $192,500 $186,200
Year Ended December 31

2014 2013
Sales $250,000 $ 230,000
Gross margin 86,000 87,700
Operating expenses 64,000 54,000
Operating income 22,000 33,700
Interest expense 7,500 5,900
Earnings before income taxes 14,500 27,800
Income taxes 7,800 7,140
Net earnings $ 6,700 $ 20,660
Using horizontal analysis, how much is the percentage change in cash for Bent Stew Enterprises
from 2013 to 2014?
A. 375.00% increase
B. 73.33% increase
C. 26.67% increase
D. 275.00% increase
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is the company’s gross margin percentage for 2014?
A. (1.98%)
B. 34.40%
C. 98.16%
D. 7.80%
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
Bent Stew Enterprises had 10,000 shares of common stock outstanding during both 2013 and
2014. How much was earnings per share in 2014?
A. $0.15
B. $0.67
C. $1.49
D. $19.25
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
Using vertical analysis, how would you best describe the change in the company’s operating
expenses from 2013 to 2014?
A. Operating expenses increased from 1.63% of net earnings to 9.55% of net earnings from
2013 to 2014.
B. Operating expenses increased by $10,000 from 2013 to 2014.
C. Operating expenses increased from 23.5% to 25.6% of sales from 2013 to 2014.
D. Operating expenses increased by 18.5% from 2013 to 2014.
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
Using horizontal analysis, how would you best describe the change in the company’s operating
expenses from 2013 to 2014?
A. Operating expenses increased from 1.63% of net earnings to 9.55% of net earnings from
2013 to 2014.
B. Operating expenses increased by $10,000 from 2013 to 2014.
C. Operating expenses increased from 23.5% to 25.6% of sales from 2013 to 2014.
D. Operating expenses increased by 18.5% from 2013 to 2014.
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
What does vertical analysis for 2014 versus 2013 reveal for Bent Stew Enterprises?
A. There was no change in the proportion of common stock to total assets from 2013 to
2014.
B. Inventory levels have decreased from 2013 to 2014 in proportion to total assets.
C. Gross margin declined to 34.4% in 2014, down from 38.19% in 2013.
D. The company has a higher proportion of long-term debt in 2014 compared to 2013.
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
The company’s stock is selling for a market price of $31.00 per share at the end of 2014, up from
$28.00 per share at the end of 2013. There are 5,000 shares of common stock outstanding at the
end of 2014. How much is the company’s price-earnings ratio at the end of 2014?
A. $23.13
B. $1.34
C. $4.32
D. $41.55
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is Bent Stew’s asset turnover in 2014?
A. 1.034
B. 0.027
C. 0.770
D. 1.299
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is return on common stockholders’ equity for Bent Stew for 2014?
A. 15.26%
B. 44.67%
C. 19.14%
D. 13.48%
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
The income tax rate is 54%. How would you best describe the company’s use of financial
leverage in 2014?
A. The company is highly leveraged and is using leverage well to generate a high return for
stockholders.
B. The company is poorly leveraged.
C. The company is highly leveraged, but the leverage has a negative impact on stockholders.
D. The company has no financial leverage.
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is Bent Stew’s inventory turnover for 2014?
A. 7.32 times
B. 26.70 times
C. 49.86 times
D. 13.67 times
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is Bent Stew’s accounts receivable turnover for 2014?
A. 29.41 times
B. 37.31 times
C. 12.31 times
D. 0.03 times
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
What is the company’s days’ sales in receivables for 2014?
A. 29.41 days
B. 37.31 days
C. 12.41 days
D. 8.06 days
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is Bent Stew’s day’s sales in inventory for 2014?
A. 7.32 days
B. 26.70 days
C. 49.86 days
D. 13.67 days
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is Bent Stew’s current ratio at the end of 2014?
A. 0.92
B. 1.09
C. 1.06
D. 1.34
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is Bent Stew’s quick ratio at the end of 2014?
A. 1.09
B. 1.03
C. 0.57
D. 0.50
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is Bent Stew’s debt-to-equity ratio at the end of 2014?
A. 0.35
B. 2.87
C. 2.41
D. 0.74
December 31
2014 2013
Assets
Current assets:
Cash $ 3,000 $ 800
Total assets $192,500 $186,200


2014 2013
Sales $250,000 $ 230,000
Net earnings $ 6,700 $ 20,660
How much is Bent Stew’s times interest earned for 2014?
A. 2.93 times
B. 37.31 times
C. 0.34 times
D. 0.89 times
120. Comparative financial statements for Cross, Inc. are shown below:
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Prepaid expenses 21,203 5,118
Property, plant and equipment, net 822,576 718,144
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000
Total liabilities and stockholders’ equity $1,171,590 $1,012,159

2014 2013
Net sales $17,005,852 $13,809,585
Cost of goods sold 12,250,257 9,825,614
Gross margin 4,755,595 3,983,971
Operating expense 3,585,657 3,400,258
Operating income 1,169,938 583,713
Earnings before tax 1,141,438 556,413
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
Using horizontal analysis, how much is Cross, Inc.’s percentage change in accounts receivable
from 2013 to 2014?
A. 4.9% increase
B. 5.2% increase
C. 1.1% increase
D. 1.2% decrease
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
How much is Cross, Inc.’s gross margin percentage for 2014?

A. 19.4%
B. 72.0%
C. 28.8%
D. 28.0%
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
There were 200,000 shares of common stock outstanding during both years. How much is
earnings per share for Cross, Inc. in 2014?
A. $4.00
B. $0.05
C. $85.03
D. $5.71
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
Which one of the following is revealed by horizontal analysis of Cross, Inc. during the 2014 and
2013 years?
A. Current assets are increasing at a faster rate than total assets.
B. Sales are increasing faster than cost of goods sold.
C. Sales are increasing faster than net income.
D. Cash is increasing faster than accounts payable.
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
The market price per share of Cross, Inc.’s common stock is $103.00 at the end of 2014.
Throughout both 2013 and 2014, there are 500,000 shares of common stock outstanding. How
much is Cross, Inc.’s price-earnings ratio at the end of 2014?
A. $1.60
B. $64.46
C. $0.21
D. $1.66
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
How much is return on total assets for Cross, Inc. for 2013?
A. 68.2%
B. 69.9%
C. 68.9%
D. 14.5%
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
How much is return on common stockholders’ equity for Cross, Inc. for 2014?
A. 107.2%
B. 93.3%
C. 68.2%
D. 2.0%
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
How much is inventory turnover for Cross, Inc. for 2014?

A. 8.26 times
B. 126.7 times
C. 0.79 times
D. 2.9 times
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
How much is days’ sales in inventory for Cross, Inc. for 2014?
A. 2.9 days
B. 510 days
C. 34.8 days
D. 126.7 days
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
How much is accounts receivable turnover for Cross, Inc. for 2014?
A. 3.1 times
B. 28.0 times
C. 119.8 times
D. 5.6 times
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
What is the most likely explanation for the change in Cross’ accounts receivable turnover from
2013 to 2014?
A. The company is collecting amounts due from customers more agressively.
B. The company’s sales are primarily cash sales which do not result in receivables.
C. The company makes primarily credit sales and has very easy credit terms.
D. None of these answer choices are possible explanations.
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
How much is Cross’ current ratio at the end of 2014?

A. 1.9
B. 2.8
C. 0.4
D. 0.3
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
How much is Cross’ acid-test ratio at the end of 2014?

A. 2.8
B. 0.7
C. 2.7
D. 1.9
December 31
Assets 2014 2013
Current assets:
Cash $ 89,103 $ 68,203
Inventory 96,708 85,694
Total assets $1,171,590 $1,012,159
Common stock 600,000 600,000

2014 2013
Net sales $17,005,852 $13,809,585
Gross margin 4,755,595 3,983,971
Income taxes 342,431 166,924
Net income $ 799,007 $ 389,489
How much is the company’s debt-to-equity ratio for 2014?

A. 0.571
B. 1.065
C. 0.364
D. 0.018
134. Swanson Company has a current ratio of 2.1 and the following assets on December 31, 2014:
Cash $ 98,500
Inventory 960,000
How much are the company’s current liabilities on December 31, 2014
A. $285,000
B. $742,000
C. $753,000
D. $1,841,000
135. Chua Company has current liabilities totaling $1,500,000 and the following assets on December
31 of the current year:
Cash $ 300,000
Inventory 960,000
How much is the company’s acid-test ratio on December 31?
A. 0.20
B. 0.60
C. 1.26
D. 1.24
136. Chua Company has has a current ratio of 2.5 and the following assets on December 31, 2014:
Cash $ 300,000
Inventory 960,000
The company paid an account payable of $175,000 immediately on January 1, 2015. What effect
did this have on the current ratio?
A. An increase to 2.95
B. There was no effect since both cash and accounts payable changed by the same amount.
C. An increase to 2.50
D. A decrease to 3.26
137. Chua Company had a current ratio of 2.5 to 1 on December 31, 2014. On that date, the company’s
assets were as follows:
Cash $ 100,000
Inventory 960,000
What impact will the declaration of a cash dividend by Chua have on its current ratio?
A. An increase in the current ratio
B. A decrease in the current ratio
C. No efffect on the current ratio
D. There is not enough information provided to determine the answer.
138. Chua Company had a current ratio of 2.5 to 1 on December 31, 2014. On that date, the company’s
assets were as follows:
Cash $ 100,000
Inventory 960,000
What impact will the sale of inventory to customers for cash have on Chua’s debt-to-equity ratio?
A. An increase in the debt-to-equity ratio
B. A decrease in the debt-to-equity ratio
C. No efffect on the debt-to-equity ratio
D. There is not enough information provided to determine the answer.
Answers
31 D 53 C 75 B 97 C 119 A
32 D 54 C 76 B 98 A 120 B
33 B 55 D 77 C 99 B 121 D
34 C 56 A 78 D 100 B 122 A
35 C 57 A 79 A 101 B 123 A
36 B 58 C 80 A 102 D 124 B
37 A 59 B 81 B 103 B 125 B
38 D 60 A 82 C 104 B 126 A
39 D 61 A 83 D 105 C 127 B
40 A 62 B 84 C 106 D 128 A
41 D 63 A 85 A 107 C 129 C
42 C 64 A 86 C 108 A 130 A
43 D 65 B 87 B 109 D 131 B
44 B 66 B 88 A 110 D 132 D
45 A 67 B 89 C 111 A 133 A
46 D 68 B 90 B 112 D 134 C
47 C 69 A 91 A 113 A 135 B
48 A 70 C 92 C 114 C 136 A
49 D 71 C 93 A 115 B 137 B
50 D 72 A 94 A 116 B 138 B
51 A 73 A 95 A 117 D
52 D 74 A 96 D 118 B
MATCHING
139. Match each of the following terms with the phrase that most closely describes it. Each answer
may be used only once.
1. Balance sheet
2. Financial leverage
3. Gross margin
4. Horizontal analysis
5. Income statement
6. Investing activity
7. Management discussion and analysis
8. Operating activity
9. Statement of cash flows
10. Vertical analysis
A. Determines a the percentage change in each line item of financial statements from one
year to the next
B. Activities that impact long-term assets
C. A report that explains changes in various financial statement items
D. Using debt to increase returns to stockholders
E. Sales less cost of goods sold
F. Contains assets, liabilities, and stockholders’ equity at the end of the period
G. Indicates the revenues and expenses for the period
H. Indicates the sources and uses of cash and cash equivalents
I. Restates financial statement on a percentage basis based on total assets or net sales
J. Indicates the cash generated by the ongoing activities of the business
Answers
1 F 3 E 5 G 7 C 9 H
2 D 4 A 6 B 8 J 10 I
EXERCISES
140. The liabilities and stockholders’ equity sections of comparative balance sheets for Jenson
International are presented below for 2014 and 2013:
December 31
2014 2013
Long term debt 333,777 436,215
Common stock 100,000 100,000
Additional paid in capital 275,000 275,000
Total liabilities and stockholders’ equity $1,129,936 $980,406
Prepare a horizontal analysis of the liabilities and stockholders’ equity sections of Jenson
International’s balance sheets.
Answer
Percent
Liabilities and Stockholders’ Equity 2014 2013 Change
Accounts payable $ 67,500 $ 85,451 (21.0%)
Other current liabilities 3,488 5,157 (32.4%)
Total current liabilities 70,988 90,608 (21.7%)
Long-term debt 333,777 436,215 (23.5%)
Total liabilities 404,765 526,823 (23.2%)
Common stock 375,000 375,000 0.0%
Retained earnings 350,171 78,583 345.6%
Total stockholders’ equity 725,171 453,583 59.9%
Total liabilities and stockholders’ equity $1,129,936 $980,406 15.3%
141. Comparative income statements for Jenson International are shown below for 2014 and 2013:
2014 2013
Net sales $2,451,000 $2,321,000
Gross margin 800,545 972,670
Income before taxes 369,945 519,081
Income taxes expense 98,357 135,600
Net income $ 271,588 $ 383,481
Prepare a vertical analysis of the company’s income statements.
Answer
For the Year Ended For the Year Ended
December 31, 2014 December 31, 2013
Net sales $2,451,000 100.0% $2,321,000 100.0%
Cost of goods sold 1,650,455 67.3% 1,348,330 58.1%
Gross margin 800,545 32.7% 972,670 41.9%
Operating expenses 385,000 15.7% 420,408 18.1%
Income before interest and tax 415,545 17.0% 552,262 23.8%
Interest expense 45,600 1.9% 33,181 1.4%
Income before taxes 369,945 15.1% 519,081 22.4%
Income taxes expense 98,357 4.0% 135,600 5.8%
Net income $ 271,588 11.1% $ 383,481 16.6%
142. The following information for Redwood Junction, a retail furniture and design firm, is presented
for 2014 and 2013:
December 31
2014 2013
Assets
Current assets
Cash $ 42,000 $ 54,000
Inventory 5,010,000 4,950,000
Total current assets 5,716,000 5,528,000
Building and equipment, net 1,097,000 1,095,000
Total assets $6,813,000 $6,623,000
Bank loan payable 679,000 625,000
Other accrued payables 215,000 315,000
Total current liabilities 1,499,000 1,568,000
Long-term debt 1,729,000 1,791,000
Total liabilities 3,228,000 3,359,000
Common stock 1,307,000 1,307,000
Retained earnings 2,278,000 1,957,000
Total stockholders’ equity 3,585,000 3,264,000
Perform a horizontal analysis of the assets section of the balance sheets for Redwood Junction.
Identify the largest change.
Answer
December 31 Percent
2014 2013 Change Change
Assets
Current assets
Cash $ 42,000 $ 54,000 ($12,000) (22.2%)
Accounts receivable 580,000 445,000 135,000 30.3%
Inventory 5,010,000 4,950,000 60,000 1.2%
Prepaid expenses 84,000 79,000 5,000 6.3%
Total current assets 5,716,000 5,528,000 188,000 3.4%
Building and equipment, net 1,097,000 1,095,000 2,000 0.2%
Total assets $ 6,813,000 $ 6,623,000 $ 190,000 2.9%
The largest change is accounts receivable, which grew by 30.3%.

143. The following information for Woodchuck, a retail furniture and design firm, is presented for the
years ending December 31, 2014 and 2013:
2014 2013
Net sales $5,628,000 $5,253,000
Gross margin 2,728,000 2,553,000
Operating expenses:
Selling expenses 500,000 600,000
General and administrative expenses 835,000 788,000
Total operating expenses 1,335,000 1,388,000
Operating income 1,393,000 1,165,000
Income before taxes 1,254,000 1,007,000
Income taxes 439,000 368,000
Net income $ 815,000 $ 639,000
Perform a horizontal analysis of the income statements for Woodchuck. Identify the largest
change and list some of the causes that may have led to this change.
Answer
Year Ending December 31
Percent
2014 2013 Change Change
Net sales $ 5,628,000 $ 5,253,000 $375,000 7.1%
Cost of goods sold 2,900,000 2,700,000 200,000 7.4%
Gross margin 2,728,000 2,553,000 175,000 6.9%
Operating expenses:
Selling expenses 500,000 600,000 (100,000) (16.7%)
Gen and admin expenses 835,000 788,000 47,000 6.0%
Total operating expenses 1,335,000 1,388,000 (53,000) (3.8%)
Operating income 1,393,000 1,165,000 228,000 19.6%
Interest expense 139,000 158,000 (19,000) (12.0%)
Income before taxes 1,254,000 1,007,000 247,000 24.5%
Income taxes 439,000 368,000 71,000 19.3%
Net income $ 815,000 $ 639,000 $176,000 27.5%
The 16.7% decrease in selling expenses caused operating income to increase by 19.6%. The
company may have reduced the number of sales personnel employed or eliminated advertising
and other marketing costs.
144. The following information for Redwood Junction, a retail furniture and design firm, is presented
for 2014 and 2013:
December 31
Assets 2014 2013
Current assets
Cash $ 42,000 $ 54,000
Inventory 5,010,000 4,950,000
Total assets $6,813,000 $6,623,000
Perform a vertical analysis of the asset section of the balance sheets for the company. Identify any
major changes between 2013 and 2014. Indicate what could have led to the changes you noted in
this analysis.
Answer
Assets December 31, 2014 December 31, 2013
Current assets
Cash $ 42,000 0.6% $ 54,000 0.8%
Accounts receivable 580,000 8.5% 445,000 6.7%
Inventory 5,010,000 73.5% 4,950,000 74.7%
Prepaid expenses 84,000 1.2% 79,000 1.2%
Total current assets 5,716,000 83.9% 5,528,000 83.5%
Building and equipment, net 1,097,000 16.1% 1,095,000 16.5%
Total assets $6,813,000 100.0% $6,623,000 100.0%
There appears to be a significant increase in accounts receivable from 6.7% of total assets to 8.5%
between 2013 and 2014. This may be caused by customers not paying as quickly as they had paid
in the past, which may have been triggered by a loosening of the company’s credit policy.
145. Will Redmon is the CEO of Allistair Holdings, a company that manufactures and sells eye care
products. Will’s annual bonus depends on meeting a profit target of $7,000,000, but late in the
fourth quarter, the CFO brought Will the bad news that, based on current orders, it appeared that
earnings would be closer to $6,500,000. To deal with the situation, Will and the CFO decided on
the following strategy:
The company has firm orders for $2.5 million of merchandise to be delivered in January and
February of next year (the company’s fiscal year ends on December 31). Will proposes that
the goods be shipped in December to a warehouse where they will be held until required by
customers. Customers will be billed in December and receive a special 15 percent discount
for accepting ownership upon shipment to the warehouse. Allistair will pay for storage and
insurance until the goods are actually delivered to customer locations.
Explain how the strategy may constitute manipulation of earnings.
Answer
The strategy appears to constitute manipulation of earnings as it has the potential to increase net
income. This is often referred to as a bill and hold strategy is being undertaken purely to shift
income from a future period to the current period. The customers are not being offered a discount
to encourage a sale—the discount is being offered so the company can book the sale early.
146. Will Redmon is the CEO of Allistair, a company that manufactures and sells eye care products.
Will’s annual bonus depends on meeting a profit target of $7,000,000, but late in the fourth
quarter the CFO brought Will the bad news that, based on current orders, it appeared that
earnings would be closer to $6,500,000. To deal with the situation, Will and the CFO decided on
the following strategy:
The company has firm orders for $2.5 million of merchandise to be delivered in January and
February of next year (the company’s fiscal year ends on December 31). Will proposes that
the goods be shipped in December to a warehouse where they will be held until required by
customers. Customers will be billed in December and receive a special 15 percent discount
for accepting ownership upon shipment to the warehouse. Allistair will pay for storage and
insurance until the goods are actually delivered to customer locations.
Comment on why and how a comparison of net income versus cash flow from operations may
reveal that this action was undertaken.
Answer
The strategy will affect income but not cash flow. Accounts receivable will increase causing total
assets to look healthy. However, there will not be a cash flow to accompany this. A comparison
of net income and cash flow from operations might detect the earnings manipulation as these two
amounts, as they often significantly differ from each other when manipulation occurs.
147. The following information for Kinnis, Inc., a retail furniture and design firm, is presented at
December 31, 2014 and 2013:
December 31
Assets 2014 2013

Current assets:
Cash $ 42,000 $ 54,000
Inventory 5,010,000 4,950,000
Building and equipment 1,591,000 1,193,000
Total assets $7,207,000 $6,621,000
Long-term debt 1,729,000 1,791,000
Common stock 1,307,000 1,305,000
There were 100,000 shares of common stock outstanding at the end of both years. The income tax
rate is 35%. Interest expense totaled $139,000 for 2014 and $158,000 for 2013. The market price
per share was $110 at the end of 2013 and $134 at the end of 2014. Net income was $615,000 for
2014 and $739,000 in 2013. Net sales totaled $4,568,000 and $3,253,000 for 2014 and 2013,
respectively.
a. Calculate the following for 2014 and 2013:
1. Earnings per share
2. Price–earnings ratio
3. Return on total assets
4. Return on common stockholders’ equity
b. Comment on any trends apparent in the ratios.
Answer
a. 1. 2014 = $615,000 ÷ 100,000 = $6.15
2013 = $739,000 ÷ 100,000 = $7.39
2. 2014 = $134 ÷ $6.15 = $21.79
2013 = $110 ÷ $7.39 = $14.88
3. 2014 = [$615,000 + ($139,000 × (1 – 0.35))] ÷ $7,207,000 = 0.098
2013 = [$739,000 + ($158,000 × (1 – 0.35))] ÷ $6,621,000 = 0.127
4. 2014 = $615,000 ÷ $3,879,000 = 0.159
2013 = $739,000 ÷ $3,262,000 = 0.227
b. Earnings per share decreased due to the decrease in net income from 2013 to 2014.
However, since the stock price increased, the price-earnings ratio increased. The return
on total assets indicates the company is earning 9.8 cents per dollar of assets invested
rather than 12.7 cents form 2013, a modest decrease. The return on common equity
decreased in 2014 due to the decrease in net income and an increase in equity.
148. Jim Parker is interested in purchasing the stock of Hackett, a company that sells bricks to the
construction industry. Before purchasing the stock, Parker would like to learn as much as possible
about the company in which he is contemplating the potential investment. However, the only
information that Parker has is a portion of Hackett’s annual report for the current year (Year 3),
which contains no comparative data other than the summary of the ratios listed below:
Year 3 Year 2 Year 1
Current ratio 2.8:1 2.3:1 2.1:1
Acid-test ratio 0.8:1 1.0:1 1.2:1
Accounts receivable turnover 8.9 times 10.1 times 12.5 times
Inventory turnover 6.1 times 8.1 times 8.3 times
Return on total assets 15.50% 12.10% 10.30%
Return on common stockholders' equity 18.10% 14.70% 11.90%
Price-earnings ratio 12.3 17.2 17.7
Earnings per share $1.53 $1.52 $1.55
Is the market price of the company’s stock increasing or decreasing? Support your answer with
accounting justification citing specific information in the analysis.
Answer
Hackett’s market price is declining as seen in the decline of its price-earnings ratio in Year 2 and
Year 3. The price-earnings ratio indicates that the market price per share compared to the
earnings produced by the company is declining. Given the steady earnings per share over the
three years, the factor causing the price-earnings ratio to drop is the stock price.
149. Comparative financial statements for Smart Buy are shown below for the year’s ending
December 31, 2014 and 2013:
December 31
Assets 2014 2013
Current assets:
Cash $ 14,000 $ 12,458
Inventory 39,239 32,568
Other 3,400 2,581
Long-term investments 128,580 104,600
Total assets $1,019,853 $958,951
Common stock 375,000 375,000
2014 2013
Net sales $2,281,789 $2,074,354
Gross margin 775,808 726,024
Income tax expense 98,357 95,352
Net earnings $ 182,664 $ 177,083
Smart Buy had 50,000 common shares outstanding throughout 2014. The December 31, 2014
market price is $43 per share. Calculate the following profitability ratios for 2014 for Smart Buy:
a. Earnings per share
b. Price-earnings ratio
c. Gross margin percentage
d. Return on total assets
e. Return on common stockholders’ equity
Answer
a. $182,664 ÷ 50,000 = $3.65
b. $43 ÷ $3.65 = $11.78
c. $775,808 ÷ $2,281,789 = 34.0%
d. ($182,664 + ($36,542 × (1– 35%)) ÷ $1,019,853) = 20.2%
e. $182,664 ÷ $460,827 = 39.6%
150. Comparative financial statements for TJ Cleaners for December 31, 2014 and 2013 follow:
December 31
Assets 2014 2013
Current assets:
Cash $ 12,000 $ 12,458
Inventory 40,239 33,568
Total assets $1,097,273 $929,951
Common stock 375,000 336,000
2014 2013
Net sales $2,111,789 $2,174,354
Gross margin 605,808 526,024
Income taxes expense 98,357 15,352
Net earnings $ 52,664 $ 57,083
TJ sells all items on account. Calculate the following for TJ Cleaners for 2014:
a. Asset turnover
b. Accounts receivable turnover
c. Days’ sales in inventory
d. Inventory turnover
e. Days’ sales in inventory
Answer
a. $2,111,789 ÷ $1,097,273 = 1.92 times
b. $2,111,789 ÷ $45,489 = 46.42 times
c. 365 ÷ 46.42 = 7.86 days
d. $1,505,981 ÷ $40,239 = 37.42 times
e. 365 ÷ 37.42 = 9.75 days
151. The following information for BuyRite Rooms, a retail furniture and design firm, is presented for
2014 and 2013:
December 31
Assets 2014 2013
Current assets:
Cash $ 42,000 $ 54,000
Inventory 5,010,000 4,950,000
Total assets $6,813,000 $6,623,000
Liabilities and stockholders’ equity
Long-term debt 1,729,000 1,791,000
Common stock 1,307,000 1,307,000
There were 100,000 shares of common stock outstanding during both years. In addition, the
following information is provided:
2014 2013
Market price per share at the end of year $ 134 $ 110
Net income for the year 815,000 639,000
Cost of goods sold for the year 2,900,000 2,700,000
Net sales for the year 5,568,000 5,253,000
a. Calculate asset turnover, accounts receivable turnover, days’ sales in receivables,

inventory turnover, and days’ sales in inventory for 2013 and 2014. Use three significant
digits for all calculations.
b. How well does BuyRite Rooms appear to manage its accounts receivable and inventory?
What suggestions do you have for the company’s managers?
Answer
a. Asset turnover = Net sales ÷ Total assets
2013 = $5,253,000 ÷ $6,623,000 = 0.793
2014 = $5,568,000 ÷ $6,813,000 = 0.817
Accounts receivable turnover = Net credit sales ÷ Accounts receivable

2013 = $5,253,000 ÷ $445,000 = 11.804
2014 = $5,568,000 ÷ $580,000 = 9.600
Days’ sales in receivables = 365 ÷ Accounts receivable turnover

2013 = 365 ÷ 11.804 = 30.920 days
2014 = 365 ÷ 9.600 = 38.021 days
Inventory turnover = Cost of goods sold ÷ Inventory

2013 = $2,700,000 ÷ $4,950,000 = 0.545
2014 = $2,900,000 ÷ $5,010,000 = 0.579
Days’ sales in inventory = 365 ÷ Inventory turnover

2013 = 365 ÷ .545 = 669.72 days
2014 = 365 ÷ .579 = 630.40 days
b. There appears to be a very significant problem related to excess inventory. The company
has approximately 1.7 years of inventory on hand! Quite possibly, return on total assets
could be improved by decreasing inventory. Accounts receivable may need some
attention as the number of days to collect its entire dollar amount of receivables is
increasing.
152. Hank Hatley is interested in purchasing the stock of Brinker, a company that sells bricks to the
construction industry. Before purchasing the stock, Hatley would like to learn as much as
possible about the company in which he is contemplating a potential investment. However, the
only information that Hatley has is a portion of Brinker’s annual report for the current year (Year
3), which contains no comparative data other than the summary of the ratios listed below:
Current ratio 2.6:1 2.3:1 2.1:1
Acid-test ratio 0.8:1 1.0:1 1.2:1
Are customers paying their accounts as well as they were in Year 1? Support your answer with
Answer
Yes, customers are paying their accounts almost as well in year 3 as they did in Year 1. In Year 1,
Brinker’s accounts receivable turnover was 10.5, but in Year 3, it dropped to 10.0. This drop
indicates that the balance of accounts receivable is increasing slightly due to lack of collection of
the entire receivable balance. Hatley should consider adding the calculation and assessment of
days’ sales outstanding in the company’s analysis.
153. The following information for 2014 and 2013 is presented for BuyRite:
December 31
Assets 2014 2013
Current assets:
Cash $ 42,000 $ 54,000
Inventory 5,010,000 4,950,000
Total assets $6,813,000 $6,623,000
Long-term debt 1,729,000 1,791,000
Common stock 1,307,000 1,307,000
There were 100,000 shares of common stock outstanding throughout both 2013 and 2014. Additional
information follows:
2014 2013
Market price per share at the end of year $ 134 $ 110
Net income for the year 815,000 639,000
Cost of goods sold for the year 2,900,000 2,700,000
Net sales for the year 5,568,000 5,253,000
a. Calculate the 1) current ratio, 2) acid-test ratio, and the 3) debt-to-equity ratio for 2013
and 2014. Calculate to three significant digits.
b. The company intends to apply for a loan. What concerns might the loan officer have
about lending to the company?
Answer
a. 1. 2013 = $5,528,000 ÷ $1,568,000 = 3.526
2014 = $5,716,000 ÷ $1,499,000 = 3.813
2. 2013 = ($55,000 + $445,000) ÷ $1,568,000 = 0.318
2014 = ($42,000 + $580,000) ÷ $1,499,000 = 0.414
3. 2013 = $3,359,000 ÷ $3,264,000 = 1.029
2014 = $3,228,000 ÷ $3,565,000 = 0.905
b. The acid-test ratio is low, while the current ratio deceivingly appears to be adequate to
pay current debts when due. The low acid-test ratio is due to a large amount of inventory,
which cannot be turned into cash quickly. The debt-to-equity ratio is reasonable. The loan
officer may be concerned that the company does not have enough cash to pay its current
obligations when due.
154. Wyatt Parks is interested in purchasing the stock of Dobbins Products, a company that sells
bricks to the construction industry. Before purchasing the stock, Parks would like to learn as
much as possible about the company. However, all he has to go on is the current year’s (Year 3)
annual report, which contains no comparative data other than the summary of the ratios given
below:
Current ratio 1.7 2.3 2.1
Acid-test (quick) ratio 0.8 1.0 1.2
Is it becoming easier for the company to pay its bills as they come due? Support your answer with
Answer
It is becoming more difficult for Dobbins Products to pay its bills as they come due given that its
current ratio has decreased in the most recent year (Year 3) to 1.7. In addition, in the very short
term, Dobbins Products may not be able to quickly turn its receivables and inventory into cash as
demonstrated by its decline in the acid-test ratio.
155. Comparative financial statements for Smart Buy for the years ending December 31, 2014 and
2013 are shown below:
December 31
Assets 2014 2013
Current assets:
Cash $ 14,000 $ 12,458
Inventory 39,239 32,568
Total assets $1,019,853 $958,951
Common stock 100,000 100,000
Total liabilities and stockholders’ equity $1,019,853 $ 958,951

2014 2013
Net sales $2,281,789 $2,074,354
Gross margin 775,808 726,024
Net earnings $ 182,664 $ 177,083
Calculate the following ratios for 2014 for Smart Buy:
a. Current ratio
b. Quick ratio
c. Debt-to-equity ratio
d. Times interest earned
Answer
a. $102,128 ÷ $102,245 = 1.00
b. $59,489 ÷ $102,245 = 0.58
c. $559,026 ÷ $460,827 = 1.21
d. $317,563 ÷ $36,542 = 8.69 times
CHALLENGE EXERCISES
156. Comparative balance sheets for Save-A-Penny for the years ending December 31, 2014 and 2013
are shown below:
December 31
Assets 2014 2013
Current assets:
Cash $ 15,600 $ 14,200
Inventory 21,200 24,500
Total assets $345,000 $327,000

Selected additional amounts for Save-A-Penny follow for the years ending December 31,
2014 and 2013:
2014 2013
Net sales $432,000 $398,000
Net earnings 37,100 36,400
Calculate at least 3 debt-related ratios for Save-A-Penny for 2014 and 2013. Evaluate the risk
considerations and any changes between the two years as it relates to Save-A-Penny’s ability to
satisfy its obligations.
Answer
Current ratio: 2014: $59,700 ÷ $41,000 = 1.46
2013: $61,000 ÷ $39,000 = 1.56
Acid-test ratio: 2014: ($15,600 + $19,800) ÷ $41,000 = 0.86

2013: ($14,200 + $17,500) ÷ $39,000 = 0.81
Debt-to-equity ratio: 2014: $257,000 ÷ $88,000 = 2.92

2013: $243,000 ÷ $84,000 = 2.89
Times interest earned: 2014: $65,900 ÷ $12,900 = 5.11

2013: $64,000 ÷ 12,000 = 5.33

While the current ratio has dropped slightly, there is a slight increase in the acid-test ratio
indicating that the company is better prepared to pay its obligations on a very short-term basis.
The slight increase in the debt-to-equity ratio indicates the company has a higher amount of debt
relative to its equity in 2014 as compared to 2013. There is also a slight drop in the company’s
ability to make interest payment between the two years. All four of the ratios declined somewhat
creating a slight increase in the risk of Save-A-Penny’s ability to satisfy its obligations.
157. Harry’s Fresh Seafood just completed its first three years of operations. The accountant
performed the following ratio analysis for the company:
a. Calculate day’s sale in receivables and day’s sales in inventory for all three years.
Interpret the ratios.
b. Evaluate the efficiency with which Harry’s Fresh Seafood manages its receivables and
inventory. Interpret the ratios and support your answer with accounting justification
citing specific information in the analysis.
c. For what reason do the two turnovers differ so dramatically?
Answer
a. Days’ sales in receivables:
Year 3: 365 ÷ 16.9 = 21.6 days
Year 2: 365 ÷ 13.1 = 27.9 days
Year 1: 365 ÷ 11.5 = 31.8 days
Days’ sales in inventory:
Year 3: 365 ÷ 144.1= 2.5 days
Year 2: 365 ÷ 120.3 = 3.0 days
Year 1: 365 ÷ 99.3 = 3.7 days
Harry’s has been selling the total dollar amount of its inventory about 144.1 times during
year 3, compared to 120.3 times in year 2, and 99.3 times in year 1. During year 3, it took
only 2.5 days to sell the inventory on hand, a decline from 3 days in year 2, and 3.7 days
in year 1. Harry’s has improved its holding period for inventory and is selling its
inventory more quickly during the three-year period.
Harry’s Fresh Seafood is collecting the amounts due from customers more
quickly each year, with a significant reduction of receivables on hand from 21.6 days in
year 3 to 27.9 days in year 2, and 31.8 days in year 3. This represents an increase in the
collection of amounts owed by customers from 11.5 times year 1 to 16.9 times in year 3,
a significantly favorable trend.
The nature of the business operations is likely the reason that inventory turns
over so much more quickly than receivables turnover, because fresh seafood has a short
shelf life and must be sold in a short period of time.
158. Comparative balance sheets for Save-A-Penny for the years ending
December 31, 2014 and 2013 are shown below:
December 31
Assets 2014 2013
Current assets:
Cash $ 15,600 $ 14,200
Inventory 21,200 24,500
Total assets $345,000 $327,000

Common stock, $2 par value 22,000 19,800
Additional information follows for the years ending December 31, 2014 and 2013:
2014 2013
Net sales $432,000 $398,000
Net earnings 37,100 36,400
End of year stock price per share 18.00 15.00
Dividends paid 4,000 1,800
The shares outstanding during 2014 totaled 10,200, with 9,900 outstanding during 2013.
Calculate earnings per share, the price-earnings ratio, and return on common stockholders’ equity
for Save-A-Penny for 2014 and 2013. Evaluate the company’s profitability and any changes
between the two years.
Answer
Earnings per share:
2014: $37,100 ÷ 10,200 = $3.64 per share
2013: $36,400 ÷ 9,900 = $3.67 per share
Price-earnings ratio:
2014: $18 ÷ $3.64 = $4.94
2013: $15 ÷ $3.67 = $4.08
Return on common stockholder’s equity:

2014: $37,100 ÷ $88,000 = 0.422
2013: $36,400 ÷ $84,000 = 0.433
Earnings per share was relatively steady due to additional shares of stock issued during 2014 and
higher net earnings in 2014. The rise in the price-earnings ratio indicates that shareholders were
willing to pay $4.94 per dollar of sales in 2014, a significant increase from $4.08 in 2013. Return
on common stockholders’ equity increased slightly due to the company’s ability to earn a higher
return on the funds invested by shareholders.
SHORT-ANSWER ESSAYS
159. List three reasons why managers need to be able to analyze financial statements.
Answer
Managers need to be able to use financial statements to control operations, to assess the viability
of vendors, customers and other business partners, and to understand how the company appears to
shareholders and creditors.
160. What are the three major financial statements and what information does each contain?
Answer
The balance sheet is a snapshot of the company’s assets, liabilities, and equities at a point in time.
The income statement shows the revenues and expenses of a company for a period of time.
The statement of cash flows shows the amount of cash used or generated for a period of time
from operating, investing, and financing activities.
161. Explain the nature of horizontal and vertical analysis.
Answer
Horizontal analysis looks at the changes from one period to the next in the line items on the
financial statements. It allows managers to see how the various items are changing relative to
each other.
Vertical analysis looks at how the items within a given period relate to each other. All
items on the statements are expressed as a percentage of a base amount, usually assets or sales.
162. Explain why net interest is added back to net income to calculate return on total assets.
Answer
Assets are supported by both debt and equity funding. Return on total assets measures the
profitability of a firm independently of how it is financed. Thus the return to debt, which is
interest, needs to be added to the return to equity, which is net income. The cost of interest is
reduced by the tax effect since interest reduces income taxes paid.
163. What sources other than financial statements are used to analyze a company and what information
is available from those sources?
Answer
Management’s discussion and analysis is presented in the company’s annual report and gives an
explanation from management as to why financial statement items have changed.
Credit reports will provide information about a company’s historical credit record. This will help
assess a customer’s ability to meet its obligations.
News articles appear frequently and can provide information on a variety of topics.
164. Why is the accounts receivable turnover that is computed from published financial statements
often misleading?
Answer
The financial statements do not disclose credit sales, so it is unclear what sales figure should
relate to accounts receivable in computing the ratio.
165. What is financial leverage and how can you tell if it is being used effectively?
Answer
Financial leverage is utilizing debt to increase the return to equity. It is being utilized effectively
if the return on common stockholders’ equity is higher than the return on total assets.
166. Turnover ratios measure a key business ‘efficiency’. What efficiency is measured by asset
turnover? Why is efficiency important for a company?
Answer
Asset turnover measures the efficiency with which a company uses its assets to generate sales
revenue. Assets are economic resources and their purpose is to generate future benefits for a
company. As a company’s assets are used in operations, they generate sales, which in turn are
expected to increase a company’s net income, and increase shareholder value of the company by
adding to a company’s equity.

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CHA P TER 14

Analyzing Financial Statements: A Managerial Perspective

12. Common size financial statements are an example of horizontal analysis.

33. Which of the following does accounts receivable turnover measure?

38. Which of the following is not a profitability ratio?

39. Which of the following changes is the least favorable?

40. Net cash provided by operations represents

41. What does financial leverage measure?

42. What is asset turnover?

43. Which of the following is true concerning vertical analysis?

44. Which of the following is true concerning horizontal analysis?

56. What effect does financing with debt have on a company?

57. Which of the following is not a profitability ratio?

60. Which statement is true concerning the gross margin percentage?

73. The following is from Nantucket Limited’s records for 2014:

76. Asset turnover is

77. Asset turnover is a measure of

78. Inventory turnover

79. The higher the amount of a company’s accounts receivable turnover,

80. Which statement is true concerning the current ratio?

81. Wangley Company has an inventory turnover of 8. Which statement is true?

94. What does times interest earned measure?

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Liabilities and Stockholders’ Equity

Year Ended December 31

Year Ended December 31

Year Ended December 31

How much is Cross, Inc.’s gross margin percentage for 2014?

Year Ended December 31