Question 1:
Express each income statement component as a percentage of sales, and comment on the trends in each line from 2013 to 2014.
|
2014 |
% Sales |
2013 |
% Sales |
| Sales |
$ 1,000,000 |
|
$ 1,200,000 |
|
| Cost of goods sold |
$ 450,000 |
|
$ 600,000 |
|
| Gross margin |
$ 550,000 |
|
$ 600,000 |
|
| Operating expenses |
$ 600,000 |
|
$ 450,000 |
|
| Net income |
$ (50,000) |
|
$ 150,000 |
|
Question 2:
Compute (1) accounts receivable turnover for 2014, (2) the inventory turnover for 2014, and (3) the net margin for 2014.
|
2014 |
2013 |
|
|
|
| Accounts receivable |
$ 380,000.00 |
$ 376,000.00 |
| Allowance for doubtful accounts |
$ (20,000.00) |
$ (16,000.00) |
| Net accounts receivable |
$ 360,000.00 |
$ 360,000.00 |
|
|
|
| Inventory |
$ 480,000.00 |
$ 440,000.00 |
|
|
|
|
|
|
| Sales |
$ 3,400,000.00 |
$ 3,080,000.00 |
|
|
|
| Cost of goods sold |
$ 1,600,000.00 |
$ 1,440,000.00 |
|
|
|
| Operating expenses |
$ 780,000.00 |
$ 680,000.00 |