September 3, 2017

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

Accounting

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

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