# Ratios, common-size statements, and trend percents

Problem 13-1A: Ratios, common-size statements, and trend percents

Selected comparative financial statements of Korbin Company follow:
KORBIN Company
Comparative Income Statements
For Years Ended December 31, 2009, 2008, and 2007
2009 2008 2007

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Sales \$430,185 \$329,557 \$228,700
Cost of goods sold 258,971 207,291 146,368
Gross Profit \$171,214 \$122,266 \$82,332
Selling expenses 61,086 45,479 30,188
Total expenses \$99,803 \$74,480 \$49,170
Income before taxes \$71,411 \$47,786 \$33,162
Income taxes 13,282 9,796 6,732
Net income \$58,129 \$37,990 \$26,430

KORBIN Company
Comparative Balance Sheets
December 31, 2009, 2008, and 2007
2009 2008 2007

Assets
Current assets \$45,403 \$36,972 \$47,969
Long-term investments 0 700 4,850
Plant assets, net 86,967 90,864 53,673
Total assets \$132,370 \$128,536 \$106,492

Liabilities and Equity
Current liabilities \$19,326 \$19,152 \$18,636
Common stock 67,000 67,000 49,000
Other paid-in capital 8,375 8,375 5,444
Retained earnings 37,669 34,009 33,412
Total liabilities and equity \$132,370 \$128,536 \$106,492
Required:
1. Compute each year’s current ratio. (Round your answer to 1 decimal place.)
2. Express the income statement data in common-size percents.
3. Express the balance sheet data in trend percents with 2007 as the base year.

Solution Preview
Problem 13-1A: Ratios, common-size statements, and trend percents

Selected comparative financial statements of Korbin Company follow:
KORBIN Company
Comparative Income Statements
For Years Ended December 31, 2009, 2008, and 2007
2009 2008 2007

Sales \$430,185 \$329,557 \$228,700
Cost of goods sold 258,971 207,291 146,368
Gross Profit \$171,214 \$122,266 \$82,332
Selling expenses 61,086 45,479 30,188
Total expenses \$99,803 \$74,480 \$49,170
Income before taxes \$71,411 \$47,786 \$33,162
Income taxes 13,282 9,796 6,732
Net income \$58,129 \$37,990 \$26,430

KORBIN Company
Comparative Balance Sheets
December 31, 2009, 2008, and 2007
2009 2008 2007

Assets
Current assets …

Solution Summary
Calculates current ratio, expresses the income statement data in common-size percents and the balance sheet data in trend percents with 2007 as the base year.To continue with the answer click on mycoursewriter.com/

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