Assignment Choice #2:Ratios, Common-Size Statements, and Trend Analysis

Fill in the Excel spreadsheet titledKorbin Companyprovided via the link at the bottom of the page to provide your answers to parts 1 and 2. Then paste the Excel data into a Word document on which you can also write the answer to part 3.

The Korbin Company comparative income statements and balance sheets for years 20X4, 20X3, and 20X2 included the following items:

Korbin Company - Comparative Income Statements

For years ended December 31, 20X4, 20X3, and 20X2

20X4

20X3

20X2

Sales

$555,000

$340,000

$278,000

Cost of goods sold

$283,500

$212,500

$153,900

Gross profit

$271,500

$127,500

$124,100

Selling expenses

$102,900

$ 46,920

$ 50,800

Admin expenses

$ 50,668

$ 29,920

$ 22,800

Total expenses

$153,568

$ 76,840

$ 73,600

Income before taxes

$117,932

$ 50,660

$ 50,500

Income taxes

$ 40,800

$ 10,370

$ 15,670

Net income

$ 77,132

$ 40,290

$ 34,830

Korbin Company - Comparative Balance Sheets

At December 31, 20X4, 20X3, and 20X2

Assets:

20X4

20X3

20X2

Current assets

$ 52,390

$ 37,924

$ 51,748

Long-term investments

$0

$ 500

$ 3,950

Plant assets, net

$100,000

$ 96,000

$ 60,000

Total assets

$152,390

$134,424

$115,698

Liabilities and Equity:

20X4

20X3

20X2

Current liabilities

$ 22,800

$ 19,960

$ 20,300

Common stock

$ 72,000

$ 72,000

$ 60,000

Other paid in capital

$ 9,000

$ 9,000

$ 6,000

Retained earnings

$ 48,590

$ 33,464

$ 29,398

Total Liabilities+Equity

$152,390

$134,424

$115,698

Required:

1.Express the income statement data in common size percentages. Round percentages to two decimal places.

2.Express the balance sheet data in trend percentages with 20X2 as the base year. Round percentages to the nearest whole number (zero decimal places).

3.Statement in length for senior management in which you comment on the significant relationships revealed by the ratio and percentages computed in the above two questions plus calculate one significant liquidity, solvency, and profitability ratio as required to provide the status of the company based on the analysis of performance measures.

\fKorbin Company Comparative Income Statements For years ended December 31, 20x4, 20x3, and 20x2 20x4 20x3 20x4 20x3 Sales: Cost of goods sold: Gross profit: Selling expenses: Administrative expenses: Total expenses: Income before taxes: Income taxes: Net income: Korbin Company Comparative Balance Sheets December 31, 20x4, 20x3, and 20x2 Assets: Current assets: Long-term investments: Plant assets, net: Total assets: Liabilities and Equity: Current liabilities: Common stock: Other paid in capital: Retained earnings: Total Liabilities+ Equity: 20x2 20x2