91) An efficient capital market is one in which market prices fully reflect all information available to the public.
92) Prepare a horizontal analysis of the following comparative income statement for Westwind Corporation. Round percentage changes to the nearest one-tenth percent.
Westwind Corporation
Comparative Income Statement
For the Years Ended December 31, 2011 and 2010
20112010
Total revenue$1,400,000$1,250,000
Expenses:
Cost of goods sold$925,000$830,000
Operating expenses313,000280,000
Interest expense14,00012,000
Income tax expense48,30038,000
Total expenses$1,300,300$1,160,000
Net income$99,700$90,000
93) Data for the most recent four fiscal years of Burleigh Falls Corp. are given below:
2011201020092008
Net sales$83,000$75,000$67,000$60,000
Cost of goods sold34,00032,00030,00026,000
Gross margin$49,000$43,000$37,000$34,000
Operating expenses26,00022,00019,00014,000
Net income$23,000$21,000$18,000$20,000
Required:
a. Prepare an analysis showing the trend percentages for the four-year period using 2008 as the base year.
b. What do the trend percentages indicate regarding Burleigh Falls Corp.'s income statement data?
94) Following is a comparative balance sheet for Barking Shark International Corporation:
Barking Shark International Corporation
Balance Sheet
December 31, 2011 and 2010
20112010
Current assets
Cash$ 10,000$ 5,000
Short-term investments7,00010,000
Accounts receivable, net30,00023,000
Inventory37,00035,000
Prepaid expenses4,0003,000
Total current assets$ 88,000$ 76,000
Property, plant, and equipment, net33,30035,000
Other assets27,00022,500
Total assets$148,300$133,500
Current liabilities
Short-term borrowings$ 28,400$ 13,900
Accounts payable20,00022,500
Total current liabilities$48,400$36,400
Long-term debt37,50033,000
Total liabilities$85,900$69,400
Shareholders' equity
Common shares$20,000$20,000
Retained earnings42,40044,100
Total shareholders' equity$62,400$64,100
Total liabilities and shareholders'
equity$148,300$133,500
Required:
a. Calculate and show the percentages that would appear in a horizontal analysis for this balance sheet.
b. Indicate any positive or negative developments from one year to the next.