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    Ratios, common-size statements, and trend percents

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    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
    Administrative expenses 38,717 29,001 18,982
    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.

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    https://brainmass.com/business/financial-statements/ratios-common-size-statements-and-trend-percents-220609

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    Solution Preview

    Please see attached file
    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
    Administrative expenses 38,717 29,001 18,982
    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.

    $2.19

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