University:
Eastern Kentucky University
Course:
ACC 201 | Introduction to Financial Accounting
Academic year:

2022
Views:

312

Pages:

3
Author:

Carissa Thomas

Chapter 13 - Analyzing Financial Statements MINI-EXERCISES M13–1. Gross Profit ÷ $1,665,000 = 44% Gross Profit = $732,600 Revenue $1,665,000 Cost of Goods Sold (X) Gross Profit $732,600 Cost of Goods Sold $932,400 M13–2. 2015 Sales $31,198 * Cost of Goods Sold ($9,107) Gross Profit $22,091 *Sales 2015: $29,600 x 1.054 = $31,198 Gross Profit %: $22,091 ÷ $31,198 = 70.8% M13–3. $183,000 / [($1,100,000 + $1,250,000) ÷ 2] = 15.6% M13–4. 21% - 6% = 15% M13–5. If the average sales volume remains the same, then the cost of goods sold will also remain the same. If the inventory decreases by 25%, the inventory turnover ratio will increase. Financial Accounting, 8/e 13–5 Chapter 13 - Analyzing Financial Statements M13–6. Current Assets + Noncurrent Assets Total Assets X $480,000 $1,400,000 Current Assets = $920,000 $920,000 ÷ Current Liabilities = 3.5 Current Liabilities = $262,857 M13–7. Current Ratio = Current Assets Current Liabilities Quick Ratio = Quick Assets Current Liabilities By the definitions of current ratio and quick ratio, one can see that the quick ratio must always be less than or equal to the current ratio. We know that a mistake has been made in this case because the quick ratio is greater than the current ratio and that is not possible. M13–8. Market Price per Share $228 ÷ Earnings per Share $9.50 = P/E multiplier 24 $9.50 x 1.13 = $10.74 $10.74 x 24 = New Stock Price $257.64 M13–9. 5% = $3.50 ÷ Market Price per Share $70.00 = Market Price per Share 13–6 Solutions Manual Chapter 13 - Analyzing Financial Statements M13–10. In most circumstances, a change from FIFO to LIFO will cause inventory to decrease and cost of goods sold to increase. Profit Margin Will decrease Fixed Asset Turnover Will not be affected Current Ratio Will decrease Quick Ratio Will not be affected Financial Accounting, 8/e 13–7