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Perform ratio analysis, and discuss change in financial position and operating results

Condensed balance sheet and income statement data for Jernigan Corporation are presented here.
JERNIGAN CORPORATION
Balance Sheet
December 31
2014 2013 2012
Cash $30,000 $20,000 $18,000
Accounts receivable (net) 50,000 45,000 48,000
Other current assets 90,000 95,000 64,000
Investments 55,000 70,000 45,000
Plant and equipment (net) 500,000 370,000 358,000
$725,000 $600,000 $533,000
Current liabilities $85,000 $80,000 $70,000
Long-term debt 145,000 85,000 50,000
Common stock, $10 par 320,000 310,000 300,000
Retained Earnings 175,000 125,000 113,000
$725,000 $600,000 $533,000
JERNIGAN CORPORATION
Income Statement
For the Year Ended December 31
2014 2013
Sales revenue $740,000 $600,000
Less: Sales return and allowances 40,000 30,000
Net sales 700,000 570,000
Cost of goods sold 425,000 350,000
Gross profit 275,000 220,000
Operating expenses (including income taxes) 180,000 150,000
Net income 95,000 70,000
Additional information:
1. The market price of Jernigan’s common stock was $7.00, $7.50, and $8.50 for 2012,
2013, and 2014, respectively.
2. You must compute dividends paid.  All dividends were paid in cash.
Instructions
(a) Compute the following ratios for 2013 and 2014.
(1)  Profit margin. 5. Price-earnings ratio.
(2)  Gross profit rate. 6. Payout ratio.
(3)  Asset turnover. 7. Debt to assets ratio.
(4)  Earnings per share.
(b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in the
financial position and operating results from 2013 to 2014 of Jernigan Corporation.
NOTE:  Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .
(a)(1) Profit margin
2014 2013
Net income
Net sales
Profit margin ? ?
(a)(2) Gross profit rate
2014 2013
Gross profit
Net sales
Gross profit rate ? ?
(a)(3) Asset turnover
2014 2013
Total assets, 2014 Value
Total assets, 2013 Value Value
Total assets, 2012 Value
Average total assets ? ?
2014 2013
Net sales Value Value
Average total assets Value Value
Asset turnover ? ?
(a)(4) Earnings per share
2014 2013
Common shares outstanding, 2014 Value
Common shares outstanding, 2013 Value Value
Common shares outstanding, 2012 Value
Average common shares outstanding ? ?
2014 2013
Net income – Pfd. Dividends Value Value
Average common shares outstanding Value Value
Earnings per share ? ?
(a)(5) Price-earnings ratio
2014 2013
Stock price per share Value Value
Earnings per share Value Value
Price-earnings ratio ? ?
(a)(6) Payout ratio
2014 2013
Prior year’s retained earnings Value Value
Plus: current year net income Value Value
Less: current year’s retained earnings Value Value
Cash dividends declared ? ?
2014 2013
Cash dividends declared (common) Value Value
Net income Value Value
Payout ratio ? ?
(a)(7) Debt to assets ratio
2014 2013
Current Liabilities Value
Long-term debt Value Value
Total liabilities ? ?
Total assets Value Value
Debt to assets ratio ? ?

 

E13-4   Prepare vertical analysis
Operating data for Jacobs Corporation are presented below.
2014 2013
Sales revenue $800,000 $600,000
Cost of goods sold 520,000 408,000
Selling expenses 120,000 72,000
Administrative expenses 60,000 48,000
Income tax expense 30,000 24,000
Net income 70,000 48,000
Instructions
Prepare a schedule showing a vertical analysis for 2014 and 2013.
NOTE:  Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .
JACOBS CORPORATION
Condensed Income Statement
For the Years Ended December 31
2014 2013
Amount Percent Amount Percent
Sales Revenue ? ?
Cost of goods sold ? ?
Gross profit ? ?
Selling expenses ? ?
Administrative expenses ? ?
Total operating expenses ? ?
Income before income taxes ? ? ? ?
Income tax expense ? ?
Net income ? ?

 

E13-3   Prepare horizontal analysis
Here is financial information for Spangles, Inc.
December 31, 2014 December 31, 2013
Current assets $106,000 $90,000
Plant assets (net) 400,000 350,000
Current liabilities 99,000 65,000
Long-term liabilities 122,000 90,000
Common stock, $1 par 130,000 115,000
Reained earnings 155,000 170,000
Instructions
Prepare a schedule showing a horizontal analysis for 2014, using 2013 as the base year.
NOTE:  Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .
Increase or (Decrease)
2014 2013 Amount Percentage
Assets
Current assets ?
Plant assets (net) ?
     Total assets ?
Liabilities
Current liabilities ?
Long-term liabilities ?
     Total liabilities ?
Stockholders’ equity
Common stock, $1 par ?
Retained earnings ?
    Total stockholders’ equity ?
    Total liabilities and stockholders’ equity
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