Help Problem 9-1 Here are comparative statement data for Sheridan Company and Cr
ID: 2338937 • Letter: H
Question
Help Problem 9-1 Here are comparative statement data for Sheridan Company and Crane Company, two competitors. All balance sheet data are as of December 31, 2017, and December 31, 2016. Sheridan Company 2016 Crane Company 2017 2017 Net sales $1.931.000 Cost of goods sold 1,084,000 Operating expenses255,000 6,800 67,800 $561,000 296,000 91,000 2,400 32,000 Interest expense Income tax expense 691.067 $662.309 176.672 %168.470. Current assets Plant assets (net)1,116,816 1,060,000 296,223 266,721 Current liabilities Long-term liabilities241.659 190.800 62,79453,000 140,609160,728 74.938 64.196 Common stock $10 1060.000 1.060,000 254.400254 Retained eamings 365,615 310.78180.764 Prepare a vertical analysis of the 2017 income statement data for Sheridan Company and Crane Company. (Round all ratios to 1 decimal place, eg. 2-5%.) par 365,615 310,78180,764 63.596
Explanation / Answer
Income statement
Vertical Analysis
Sheridan company
% of sales = individual value/value of sales
Crane company
sales
1931000
100%
561000
100%
cost of goods sold
1084000
56.14%
296000
52.76%
gross profit
847000
43.86%
265000
47.24%
less operating expenses
255000
13.21%
91000
16.22%
operating profit
592000
30.66%
174000
31.02%
less interest expense
6800
0.35%
2400
0.43%
profit before tax
585200
30.31%
171600
30.59%
income tax expense
67800
3.51%
32000
5.70%
net profit
517400
26.79%
139600
24.88%
return on assets = net income/total average assets
Sheridan
Crane
total of assets
2017
2016
2017
2016
current assets
691067
662309
176672
168470
plantassets
1116816
1060000
296223
266721
total assets
1807883
1722309
472895
435191
Average total assets = (opening + closing)/2
1765096
454043
return on assets = net income/total average assets
517400/1765096
29.3%
139600/454043
30.8%
return on common stockholders equity
Sheridan
Crane
total of stockholders equity
2017
2016
2017
2016
commons stock
1060000
1060000
254400
254400
retained earnings
365615
310781
80764
63596
total shareholders equity
1425615
1370781
335164
317996
Average total shareholders equity = (opening + closing)/2
1398198
326580
return on shareholders equity = net income/total average shareholders equity
517400/1398198
37.00%
139600/326580
42.8%
Income statement
Vertical Analysis
Sheridan company
% of sales = individual value/value of sales
Crane company
sales
1931000
100%
561000
100%
cost of goods sold
1084000
56.14%
296000
52.76%
gross profit
847000
43.86%
265000
47.24%
less operating expenses
255000
13.21%
91000
16.22%
operating profit
592000
30.66%
174000
31.02%
less interest expense
6800
0.35%
2400
0.43%
profit before tax
585200
30.31%
171600
30.59%
income tax expense
67800
3.51%
32000
5.70%
net profit
517400
26.79%
139600
24.88%
return on assets = net income/total average assets
Sheridan
Crane
total of assets
2017
2016
2017
2016
current assets
691067
662309
176672
168470
plantassets
1116816
1060000
296223
266721
total assets
1807883
1722309
472895
435191
Average total assets = (opening + closing)/2
1765096
454043
return on assets = net income/total average assets
517400/1765096
29.3%
139600/454043
30.8%
return on common stockholders equity
Sheridan
Crane
total of stockholders equity
2017
2016
2017
2016
commons stock
1060000
1060000
254400
254400
retained earnings
365615
310781
80764
63596
total shareholders equity
1425615
1370781
335164
317996
Average total shareholders equity = (opening + closing)/2
1398198
326580
return on shareholders equity = net income/total average shareholders equity
517400/1398198
37.00%
139600/326580
42.8%
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