How am I doing on this and are these answers right? Does anyone know how to get the other answers I haven't completed?



Chapter 13: E13-3 and E13-9
Instructions
Prepare a schedule showing a horizontal analysis for 2007 using 2006 as the base year.
E13-3 Here is financial information for Ride Away Inc.
December 2007 December 2006
Current assets $128,000 $ 80,000
Plant assets (net) $400,000 $360,000
Current liabilities $91,000 $65,000
Long-term liabilities $144,000 $90,000
Common stock $138,000 $115,000
Retained earnings $155,000 $170,000

Formula: Change Since Base Period = Current Year Amount – Base Year Amount
Base Year Amount

Answers:

Current Assets (0.6) 60 % = 128,000 – 80,000
80,000

Plant Assets (net) (0.11) 11% = 400,000-360,000
360,000

Current Liabilities (0.4) 40% = 91,000-65,000
65,000

Long-term Liabilities (0.6) 60% = 144,000-90,000
90,000

Common Stock (0.2) 20% = 138,000-115,000
115,000

Retained Earnings (-0.08) -8% = 155,000-170,000
170,000

Formula: Current Result in Relation to Base Period = Current Year Amount
Base Year Amount
Answers:

Current Assets 1.6 = 128,000
80,000

Plant Assets (net) 1.11 = 400,000
360,000

Current Liabilities 1.4 = 91,000
65,000

Long-term Liabilities 1.6 = 144,000
90,000

Common Stock 1.2 = 138,000
115,000

Retained Earnings 0.91 = 155,000
170,000





E13-9 Maury Company has these comparative balance sheet data: PAGE 659

MAURY COMPANY
Balance Sheets
December 31

2007 2006
Cash 25,000 30,000
Receivables (net) 65,000 60,000
Inventories 60,000 50,000
Plant assets (net) 200,000 180,000
350,000 320,000

Accounts payable 55,000 60,000
Mortgage payable (15%) (long term liability) 100,000 100,000
Common stock, $10 par 135,000 120,000
Retained earnings 60,000 40,000
350,000 320,000

Additional information for 2007:
1. Net income was $25,000.
2. Sales on account were $400,000. Sales returns and allowances amounted to $25,000.
3. Cost of goods sold was $198,000.
4. Net cash provided by operating activities was $48,000.
5. Capital expenditures were $25,000, and cash dividends were $18,000.
Instructions
Compute the following ratios at December 31, 2007.
(a) Current 6.36 = 350,000
55,000


(b) Receivables turnover
(c) Average collection period

(d) Inventory turnover 3.6 = 198,000
(60,000 + 50,000) /2

(e) Days in inventory 101.39 = 365
3.6


(f) Cash debt coverage 25,000


Cash provided by operations
Average total liabilities

(g) Current cash debt coverage

Cash provided by operations
Average current liabilities

(h) Free cash flow

5,000 = 48,000 - 25,000- 18,000

As for the first set of numbers... first, write them as percents. e.g. 60%, not .60. Show negatives in parenthesis in accounting.
A hortizonal analysis includes the change and the percent change. You'd have 4 columns: 2007, 2006, change, percent change. So current assets would be:
$128,000 $80,000 $48,000 60%
I know you got the $48,000 or you wouldn't have gotten the 60% correct. But show that number. It's otherwise correct except the last one, which you have as (8%), but it rounds to (8.8%). I don't know how that decimal got dropped. If you're allowed to round to zero decimals (not normal), then it would be 9% not 8%.

The second set of numbers -- I've never seen that on a horizontal analysis and have no clue what that's supposed to be. I see where the percents are coming from but have no idea what they are wanting you to do with this.

Quote:

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(a) Current 6.36

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Assuming you mean current ratio, it's current assets divided by current liabilities. You've used total assets.

Quote:

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(b) Receivables turnover

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Net Sales/(average A/R)

Quote:

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(c) Average collection period

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365/answer to (b)

The above two are similar to doing the inventory ones below.

Quote:

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(d) Inventory turnover 3.6 = 198,000
(60,000 + 50,000) /2

(e) Days in inventory 101.39 = 365
3.6

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Both correct.

Quote:

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(f) Cash debt coverage 25,000


Cash provided by operations
Average total liabilities

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Show your calculations.

Quote:

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(g) Current cash debt coverage

Cash provided by operations
Average current liabilities

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It's giving you cash provided by operations, and you've proven above that you know how to get an average. So divide them. I don't know what you don't understand.

Quote:

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(h) Free cash flow

5,000 = 48,000 - 25,000- 18,000

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You have a different equation for that than I do. These equations can vary and you need to always show how your book is doing them. Sometimes I can figure out the method by looking at your calculation and sometimes I can't.