Essay about Generally Accepted Accounting Principles...

Company D The below rules are from Financial Accounting Principles, Wild, 18th ed. Comparative Income Statements December 31, Years 11 and 10 (amounts in thousands) Horizontal Analysis Year 11 Year 10 Change % Inc (Dec) NET SALES 134,550,000 123,708,000 10,842,000 8.76% Cost of Merchandise Sold 92,721,000 86,409,000 6,312,000 7.30% GROSS PROFIT 41,829,000 37,299,000 4,530,000 12.15% This column is not graded. It is provided for students to use as they analyze the ratios while preparing for the essay. Operating Expenses: Selling and Store Operating 25,827,000 23,478,000 2,349,000 10.01% Pre-Opening 222,000 267,000 -45,000 -16.85% General and Administrative 2,316,000 2,163,000 153,000 7.07% Total Operating Expenses 28,365,000 25,908,000 2,457,000 9.48% ↑↑↑ OPERATING INCOME 13,464,000 11,391,000 2,073,000 18.20% Apply the above mathematics rules to your work in this task. Enter --- in the answer field when appropriate. Interest Income (Expense): Interest Income 183,000 117,000 66,000 56.41% Less: Interest Expense 84,000 66,000 18,000 27.27% Interest, net 99,000 51,000 48,000 94.12% Quartile Select Strength, EARNINGS BEFORE INCOME TAXES 13,563,000 11,442,000 2,121,000 18.54% Company D Industry Weakness, or Ratio Analysis: Year 11 Year 10 Data No Concern Provision for Income Taxes 5,052,000 4,419,000 633,000 14.32% Ratio: NET EARNINGS 8,511,000 7,023,000 1,488,000 21.19% 3.1 Current Ratio 1.69 1.83 2.1 Weakness 1.4 Company D Comparative Balance Sheets 1.6 December 31, Years 11 and 10 Acid-Test Ratio 0.39 0.61 0.9 Weakness 0.6 Year 11 Year 10 ASSETS 13 Current Assets: Inventory Turnover 5.15 6.10 10.2 Weakness Cash and Cash Equivalents 3,566,000 5,562,000 -1,996,000 -35.89% 8.3 Short-Term Investments 36,000 162,000 -126,000 -77.78% Accounts Receivable, net 2,738,000 2,286,000 452,000 19.77% 35.2 Merchandise Inventory 20,503,000 15,534,000 4,969,000 31.99% Accounts Receivable Turnover 32.1 32.2 33.5 Weakness Other Current Assets 688,000 393,000 295,000 75.06% 31.4 Total Current Assets 27,531,000 23,937,000 3,594,000 15.01% Property and Equipment, at cost: 15.1 Land 12,843,000 11,484,000 1,359,000 11.83% Day's Sales in receivables 11.4 11.1 13.5 Strength Buildings 24,933,000 21,939,000 2,994,000 13.65% 11.3 Furniture, Fixtures and Equipment 9,411,000 7,860,000 1,551,000 19.73% 47,187,000 41,283,000 5,904,000 14.30% 30.0% Less Accumulated Depreciation 8,235,000 6,360,000 1,875,000 29.48% Debt Ratio 30.74% 28.54% 45.0% Strength Net Property and Equipment 38,952,000

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