Perform a common size analysis. What has happened to the composition (that is, t

Question

Perform a common size analysis. What has happened to the composition (that is, the % in each category) of assets and liabilites?

INFO FROM OTHER PARTS:

Common Size Balance Sheets Assets 2017 2016 Cash and cash equivalents Short-term investments Accounts Receivable Inventories Total current assets Net fixed assets Total assets Liabilities and equity 2017 2016 Accounts payable Accruals Notes payable Total current liabilities Long-term debt Total liabilities Common stock Retained Earnings Total common equity Total liabilities and equity Common Size Income Statements 2017 2016 Sales COGS except excluding depr. and amort. Depreciation and Amortization Other operating expenses EBIT Interest Expense EBT Taxes (40%) Net Income

Explanation / Answer

Solution:

Performing a common size analysis:

Common Size Balance Sheets Assets 2017 2016 Cash and cash equivalents ($27,893/$504,282) = 5.5% ($26,565/$434,657) = 6.1% Short-term investments ($4,990/$504,282) = 1.0% ($4,304/$434,657) = 1.0% Accounts Receivable ($69,733/$504,282) = 13.8% ($63,756/$434,657) = 14.7% Inventories ($111,573/$504,282) = 22.1% ($74,382/$434,657) = 17.1% Total current assets ($214,190/$504,282) = 42.5% ($169,007/$434,657) = 38.9% Net fixed assets ($290,092/$504,282) = 57.5% ($265,650/$434,657) = 61.1% Total assets 100% 100% Liabilities and equity 2017 2016 Accounts payable ($44,629/$504,282) = 8.9% ($42,504/$434,657) = 9.8% Accruals ($16,736/$504,282) = 3.3% ($15,939/$434,657) = 9.8% Notes payable ($26,470/$504,282) = 5.2% ($8,607/$434,657) = 2.0% Total current liabilities ($87,835/$504,282) = 17.4% ($67,050/$434,657) = 15.4% Long-term debt ($89,872/$504,282) = 17.8% ($77,464/$434,657) = 17.8% Total liabilities ($177,707/$504,282) = 35.2% ($144,514/$434,657) = 33.2% Common stock ($244,123/$504,282) = 48.4% ($237,013/$434,657) = 54.5% Retained Earnings ($82,451/$504,282) = 16.4% ($53,130/$434,657) = 12.2% Total common equity ($326,575/$504,282) = 64.8% ($290,143/$434,657) = 66.8% Total liabilities and equity 100% 100% Common Size Income Statements 2017 2016 Sales 100% 100% COGS except excluding depr. and amort. ($391,776/$548,486) = 71.4% ($389,164/$522,368) = 74.5% Depreciation and Amortization ($25,675/$548,486) = 4.7% ($23,507/$522,368) = 4.5% Other operating expenses ($36,036/$548,486) = 6.5% ($36,036/$522,368) = 6.9% EBIT ($95,000/$548,486) = 17.3% ($80,967/$522,368) = 15.5% Interest Expense ($7,491/$548,486) = 1.4% ($5,495/$522,368) = 1.1% EBT ($87,509/$548,486) = 16.0% ($75,472/$522,368) = 14.4% Taxes (40%) ($35,004/$548,486) = 6.4% ($30,189/$522,368) = 5.8% Net Income ($52,505/$548,486) = 9.6% ($45,283/$522,368) = 8.6%

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