612 CHAPTER 12 Financial Statement Analysis Financial Analysis Buckle The Buckle
ID: 2456165 • Letter: 6
Question
612 CHAPTER 12 Financial Statement Analysis Financial Analysis Buckle The Buckle. Inc. AP12-3 Financial information for Buckle is presented in Appendix B at the end of the book. Required: I. Complete the "Amount" and "96" columns to be used in a horizontal analysis of Buckle's income statement for the year ended February 2, 2013. 2. Calculate the following risk ratios for the year ended February 2, 2013: a. Receivables turnover ratio. b. Average collection period. c. Inventory turnover ratio. d. Average days in inventory e. Current ratio. f. Acid-test ratio. g. Debt to equity ratio. 3. Calculate the following profitability ratios for the year ended February 2, 2013: a. Gross profit ratio. b. Return on assets. c. Profit margin. d. Asset turnover e. Return on equityExplanation / Answer
(‘1) The Bucle Inc.
Horizontal Analysis of Income Statement for the Year Ending Feb 2, 2013Dollars in Thousands Except Per Share Amount Increase (Decrease)
Particulars
2013
2012
Amount
%
Sales
1124,007
1062,946
61,061
5.74
Cost of Sales
624,692
594,291
30,401
5.12
Gross Profit
499,315
468,655
30,660
6.54
Operating Expense
Selling
201,963
195,294
6669
3.41
General Administration
39,177
37,041
2136
5.77
241,140
232,335
8805
9.18
Income from Operation
258,175
236,320
21855
14.95
Other Income
3524
4161
(637)
(15.31 )
Income Before Income Tax
261,299
240,481
20818
8.66
Provision for Tax
97,394
89,025
8369
9.40
Net Income
164,305
151,456
12849
8.48
Basic EPS
3.47
3.23
0.24
7.43
Diluted EPS
3.44
3.20
0.24
7.50
(‘2)
Receivable Turnover Ratio = 1124,007 /[(3470+4584)/2]
Receivable Turnover ratio= 279.12
(‘b) Average Collection Period = 365/ Receivable Turnover ratio
Average collection period = 365/279.12
Average collection period= 1.31 days
(‘c) Inventory Turnover ratio = Cost of Good Sold/ Average Inventory
= 624,692/ [(103853+104209)/2]
Inventory turnover ratio = 6.004
(‘d) Average days in inventory = 365/ Inventory turnover ratio
Average days is inventory = 365/ 6.004
Average days in inventory = 60.78 days
(‘e) Current Ratio = Current Asset / Current Liability
Current Ratio = 276873/128956
Current ratio= 2.147
(f) Acid test ratio =
(Cash and Cash Equivalent + Short term Investment + Receivable)/ Current Liabilities
Acid test ratio= 147,492/128956
Acid test ratio= 1.14
(g) Debt to equity ratio = Total Debt / Total Equity
Debt to equity ratio = 188325/289649
Debt to equity ratio= 0.65
(‘3) (‘a) Gross Profit ratio= Gross Profit / Sales
GP Ratio= 44.42 %
(‘b) Return on Asset = Net Income / Total Assets
Return on assets= 164305/477974
Return on Assets = 34.38 %
(‘c) Profit Margin = Net Income / Net Sales
Profit Margin = 164305/1124007
Profit margin = 14.62 %
(‘d) Asset Turnover ratio= Net Sales / Average Assets
Asset turn over ratio= 1124007/[(477974+531539)/2]
Asset turn over = 2.23
(‘e) Return on equity = Net Income / Shareholders Equity
Return on equity = 164305/289649
Return on equity = 56.73 %
Particulars
2013
2012
Amount
%
Sales
1124,007
1062,946
61,061
5.74
Cost of Sales
624,692
594,291
30,401
5.12
Gross Profit
499,315
468,655
30,660
6.54
Operating Expense
Selling
201,963
195,294
6669
3.41
General Administration
39,177
37,041
2136
5.77
241,140
232,335
8805
9.18
Income from Operation
258,175
236,320
21855
14.95
Other Income
3524
4161
(637)
(15.31 )
Income Before Income Tax
261,299
240,481
20818
8.66
Provision for Tax
97,394
89,025
8369
9.40
Net Income
164,305
151,456
12849
8.48
Basic EPS
3.47
3.23
0.24
7.43
Diluted EPS
3.44
3.20
0.24
7.50
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